X has put most of its SF HQ up for sublease

Social media company X has put about 70% of the space it leases in its San Francisco headquarters complex — including about half in its iconic headquarters building — up for sublease.

Since last year, the Elon Musk-owned business has been seeking to offload two floors at 1355 Market St. totaling about 158,000 square feet, a source familiar with X’s listing told The Examiner. It recently added a third floor to the mix, bringing the total it’s put up for sublease to about 236,000 square feet, according to the source, who was not authorized to speak publicly about the matter and spoke on condition of anonymity.

X has occupied the giant Art Deco structure at the corner of Tenth and Market Streets since 2012 and leases 460,000 square feet there.

The space it’s made available at 1355 Market is in addition to 313,000 square feet in the adjoining building at 1 Tenth St it put up for sublease more than a year ago, according to the source.

X has hired JLL to find a tenant for the “excess space” it has at 1355 Market, according to a JLL representative. The JLL representative declined to confirm how much space the social media company is making available inside its main headquarters building.

The San Francisco Chronicle first reported X’s move to sublease its headquarters space , although it reported the company was putting its entire space there up for sublease. That’s not accurate, according to the source.

X representatives did not respond to an email seeking comment on the sublease move. Peter Kelley, a spokesman for JP Morgan Chase, which co-owns the building with real estate firm Shorenstein, declined to comment. Shorenstein representatives were not immediately available for comment.

As of the end of 2021, X, then known as Twitter, leased about 700,000 square feet of space at its headquarters complex , according to its 2022 annual report, the last it made public before Musk acquired it. That was down from about 800,000 two years earlier , according to its 2020 annual report.

The amount of space X has made available across the two-building complex represents nearly half of the structures’ combined 1.1. million square feet , including nearly all the space in 1 Tenth , according to figures from Shorenstein and LoopNet, a marketplace for commercial real estate. The space it has put on the market at 1355 Market is on the fifth, sixth and seventh floors, according to the source.

X’s move to sublease much of its headquarters comes in the wake of the mass layoffs the company undertook following Musk’s acquisition of it in late 2022 . From the time he purchased the then-Twitter until May 2023, the number of full-time employees at the company dropped from about 7,500 to about 1,000 , according to Business Insider.

The company’s move also follows a spate of lawsuits that were filed against it alleging it had failed to pay rent on numerous properties, including at 1355 Market.

Since Musk’s acquisition, his controversial moves to reinstate former President Donald Trump’s account and those of numerous far-right figures and his touting of an antisemitic post , have spurred numerous advertisers to abandon or curtail their spending on X. Last year, the company’s advertising revenue reportedly fell by more than half from the prior year.

The space X is putting up for sublease adds to the glut of office space in San Francisco and particularly downtown. The City’s office vacancy rate inched up to a new record of 36.8% in the second quarter, according to the real-estate company CBRE. That empty space is affecting a wide range of economic sectors, from retail to construction , and putting a drag on The City’s economy.

San Francisco passed a controversial tax break in 2011 to convince the then-Twitter to stay in The City and move its headquarters to the Mid-Market area. It has been that district’s anchor tenant ever since, helping lure other tech companies to the area and spurring the development of restaurants and bars. Twitter’s decision to remain in San Francisco also helped to shift the gravity of the Bay Area’s tech industry north from San Jose and Silicon Valley.

But the area around X’s headquarters has been in a slump since the onset of the COVID-19 pandemic, in large part due to the lack of office workers. Twitter was among the companies that most enthusiastically embraced remote work, telling employees in October 2020 they could work from home permanently going forward . Musk later reversed that policy — but did so as he was slashing staff.

It’s unclear if X’s move represents a first step in relocating its headquarters. Musk has indicated on multiple occasions a willingness to do so .

The erratic billionaire famously moved Tesla’s headquarters to Austin, Texas, from Palo Alto in 2021, although he kept much of the electric automaker’s staff in the area. Tesla still produces cars at its original factory in Fremont.

If you have a tip about tech, startups or the venture industry, contact Troy Wolverton at twolverton@sfexaminer.com or via text or Signal at 415.515.5594.