• Mon. Dec 4th, 2023

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    “Dropbox said Friday that it’s agreed to return over one quarter of its San Francisco headquarters to the landlord,” reports CNBC, “as the commercial real estate market continues to soften following the Covid pandemic.”

    The article notes that last year Dropbox’s accountants declared a $175.2 million “impairment” on the office — a permanent reduction in its value — calling it “a result of adverse changes” in the market. And the year before they announced another $400 million charge “related to real estate assets.”

    Friday CNBC reported:

    In a filing, Dropbox said it agreed to surrender to its landlord 165,244 square feet of space and pay $79 million in termination fees. Under the amendment to its lease agreement, Dropbox will offload the space over time through the first quarter of 2025. Since going remote during the pandemic three years ago, Dropbox has been trying to figure out what to do with much of the 736,000 square feet of space in Mission Bay it leased in 2017, in what was the largest office lease in the city’s history. The company subleased closed to 134,000 square feet of space last year to Vir Biotechnology, leaving it with just over 604,000 square feet…

    “As we’ve noted in the past, we’ve taken steps to de-cost our real estate portfolio as a result of our transition to Virtual First, our operating model in which remote work is the primary experience for our employees, but where we still come together for planned in-person gatherings,” a company spokesperson told CNBC in an emailed statement… Dropbox’s 2017 lease for the brand new headquarters was for 15 years… “As a result of the amendment the company will avoid future cash payments related to rent and common area maintenance fees of $137 million and approximately $90 million, respectively, over the remaining 10 year lease term,” Dropbox said in Friday’s filing.

    A short walk away from Dropbox, Uber has been trying to sublease part of its headquarters.

    The article also notes that San Francisco’s office vacancy rate “stood at 30% in the third quarter, the highest level since at least 2007, according to city data.”

    Originally Posted at https://slashdot.org/