Dropbox handing over 25% of San Francisco HQ back to landlord as commercial real estate softens
Summary
Dropbox said Friday that its agreed to return over one quarter of its San Francisco headquarters to the landlord as the commercial real estate market continues to soften following the Covid pandemic. 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. "As weve noted in the past, weve 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. While the move provides a financial benefit to the cloud software vendor, it signals that demand for office space in the city remains weak and suggests more pain may be ahead for companies that signed big leases before the pandemic, when venture funding and public investors were fueling a tech boom. Dropbox had tried working with its landlord to sublease space at the headquarters, but the real estate market deteriorated, finance chief Tim Regan, told analysts on a February earnings call.
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