October 1st, 2008
What will become of the San Francisco offices of Wachovia and Wamu?
The San Francisco Business Times released an article this week detailing the space holdings of Wachovia and Washington Mutual here in San Francisco. As has been well documented over the past couple of days, Wachovia has been sold to Citi, and Washington Mutual has been sold/ handed to J.P. Morgan Chase. These companies have space in a variety of financial district buildings including 555 California, 4 Embarcadero Center, 123 Mission, 201 Mission, and 1 Sansome.
These major transactions and the square footages they contain add a layer of uncertainty to an already very uncertain San Francisco office leasing market. As we reported on the 26th of this month, the sublease space has increased locally, and more is likely to come our direction soon. Especially if the financial services crisis transcends Wall Street and reaches over to the technology and legal industries.
The end result, as best we can see now? It is a bad time to be a landlord, and a great time to be a tenant with a lease expiring in 2009. Tenants will have the opportunity to leverage an increase in sublease space against direct landlord space which should drive rents down and concessions up. Landlords will have a lot of decisions to make regarding how hard they are willing to reach for tenants when they start to face offers that are lower than what they need to cover expectations. It should prove to be a very interesting time as the tide turns.
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Citi-Wachovia deal could add to S.F. office vacancy
Written by J.K. Dineen of the San Francisco Business TImes
Citigroup’s acquisition of Wachovia’s banking operations could create an additional 100,000 square feet of vacant sublease space in downtown San Francisco at a time when the series of mergers and bankruptcies in the financial services industry is already flooding the market with potentially superfluous space.
Wachovia occupies 70,000 square feet at Four Embarcadero Center and another 30,000 square feet at 555 California St. Other leased space includes 14,000 square feet at 1950 University Ave. in East Palo Alto, 20,000 square feet at 2033 North Main St. in Walnut Creek, and 15,000 square feet at 5000 Hopyard Rd. in Pleasanton, according to CB Richard Ellis. Wachovia has enough space to accommodate about 1,000 employees in the Bay Area.
The Citibank-Wachovia deal comes as downtown landlords and brokers are questioning the impact of a number the government-orchestrated sale of Washington Mutual to J.P. Morgan Chase that was announced Sept. 26.
Washington Mutual’s total footprint in the Bay Area is 497,000 square feet, enough space to accommodate just under 2,000 employees. The bank occupies about 160,000 square feet of space in San Francisco, with 92,180 square feet at 123 Mission St. and 71,355 square feet at 201 Mission, according to CB Richard Ellis. Another 70,000 square feet of office space is scattered through Dublin, Emeryville, Oakland, Campbell, and Palo Alto. Washington Mutual’s largest presence is in Pleasanton, where the bank occupies 267,000 square feet at 4900-5040 Johnson Drive. The fate of the huge back-office operation is in question since the Bay Area’s high costs make it a difficult for the region to be competitive for such jobs. Chase is rolling WaMu’s modest credit-card operations into its own card empire.
Citigroup has up to 200,000 square feet at its San Francisco headquarters at 1 Sansome St., which could give it the option to move some or all of Wachovia’s local operations there.
Written by John King of the San Francisco Chronicle
San Francisco Business Times Article Here
Picture Courtesy of San Francisco View
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If there is anything I can do to help you as a Tenant Representative in the commercial real estate world, please do not hesitate to get in touch with me.
Thanks for visiting,
Tom Poser, Jones Lang LaSalle, San Francisco
www.sanfranciscotenantrep.com
