New Dropbox Headquarters To Occupy 295,000 Square Feet; Lyft, Stripe Interested In Subleasing Office Space
The Dropbox headquarters will be moving to Brannan Street, San Francisco, with over 295,000 square feet of space, which leaves the current office available for sublease by tech companies such as Lyft and Stripe.
Estimates from people in the real estate industry believe that the forthcoming Dropbox headquarters in Brannan Street will cost the company about $24 million each year until 2027, according to The Information.
If the move to the new Dropbox headquarters becomes successful along with possible subleases for the old office, the file hosting company would be spending $12 million less each year in lease payments for 201,000 square feet of prime real estate.
The current Dropbox headquarters is situated near the AT&T Park baseball. In addition, the total floor area of the Dropbox headquarters measures 85,000 square feet, which makes it suitable for relatively large, open offices.
Inability To Maintain All Of The Real Estate
The decision to move the Dropbox headquarters to Brannan Street suggests that the tech company is unable to balance its growth and it acquisition of more real estate.
Dropbox is still growing, but it is not enough to compensate for all of the space it wants to have.
In 2014, the file hosting company seemed to be planning for the construction of an urban campus spanning multiple buildings in San Francisco. However, it was eventually decided in 2015 that a 500,000-square-foot Dropbox headquarters was not necessary at the time.
Perhaps the cancellation of plans was caused by a rather dismal 2015 that offset the commendable $10 billion valuation it had back in 2014 thanks to successful fundraising efforts.
Last year, online storage services that were more affordable than Dropbox proved to be a threat to the company. Additionally, Dropbox experienced markdowns from its mutual fund investors BlackRock and Fidelity.
If the company did choose to have such a massive real estate, the Dropbox headquarters would have been as big as that of Salesforce.
Dropbox, valued at $10 billion at its last fundraising in 2014, has had a rocky 12 months due to emerging competition from cheaper online storage products and markdowns by investment management corporation BlackRock and online trading brokerage Fidelity Investments.
Lyft, Stripe Need Office Space In San Francisco
The Dropbox headquarters that would soon be vacant is an area highly sought after by several tech companies since San Francisco has incredibly limited and pricey available commercial real estate.
Real estate brokerages identified tech giant Google, human resource software company Zenefits, cloud-based communication company Slack, web and mobile developer Asana, finance service company NerdWallet and identity security company OKTA as just some of the businesses looking for office space in San Francisco.
Likewise, both Lyft and Stripe also need bigger real estate in order to handle business growth properly.