LinkedIn recently signed a lease on a 26-story skyscraper in SOMA that has the capability to house up to 2,500 employees. The move is indicative of Silicon Valley’s shift north into the city and into high-rise buildings.
LinkedIn’s new lease is the fourth largest commercial real estate deal in San Francisco’s recent history, followed by Salesforce and JP Morgan. Tech companies now occupy about 17 million square feet of office space in San Francisco, according to CBRE, a commercial real estate research and consulting firm.
That number doesn’t surprise Colin Yasukochi, director of research and analysis for San Francisco at CBRE, but he is surprised that 45 percent of that 17 million is in high-rise buildings. Traditionally, tech companies prefer small, funkier buildings shorter than 10 stories, like the Twitter headquarters.
The trend toward high-rises started about 2 to 3 years ago, as tech companies grew larger.
“Once all the available space is taken, what is left is space in high-rise buildings vacated by firms downsizing because of the financial crisis,” Yasukochi said.
Since 2010, leasing activity by tech companies is 40 percent larger than during the entire dot-com period from 1995-2000. Tech companies now account for more than half of the leasing activity in San Francisco, with most of that occurring in the SOMA district.
Opening offices in San Francisco is also a strategic move to be closer to target employees — young, energetic youth. LinkedIn will have an easier time luring employees who are deterred by the long commute to Mountain View.
LinkedIn already occupies a skyscraper in San Francisco, using close to 60,000 square feet of space. They will more than double their space when they move into the new building in 2016. The tech company will maintain their main office in Mountain View. Yasukochi suspects that most companies won’t completely relocate to the city from Silicon Valley.
The building, located at 222 Second St., is under construction and will be finished in 2015.
LinkedIn declined to comment on the new lease.