Simpson Thacher has snapped up 32,000 square feet of offices in San Francisco’s South Financial District in a building once occupied by Google.
The New York-based law firm — which advised in the 2022 Twitter acquisition by Elon Musk — inked a lease for the office it plans to open early next year at the One Market Plaza campus at 1 Market Street, the San Francisco Business Times reported, citing an earnings call.
Terms of the lease at the 42-story Spear Tower with New York-based Paramount Group were not disclosed.
The deal marks the first successful lease to backfill the 342,000-square-foot chunk of offices left empty by Google. The Mountain View-based tech firm’s lease expired last month.
The 1.6-million-square-foot One Market Plaza has two highrise towers with a six-story annex, and an 11-story historic building known as The Landmark.
Peter Brindley, head of real estate at Paramount, told investors on the earnings call that it and New York-based Blackstone, which co-own the building, are determined to fill their known “move outs,” or blocks of offices that either have or will come available this year.
In San Francisco, that includes the former Google offices at One Market, plus 220,000 square feet at One Front Street leased to JPMorgan until June, according to the Business Times.
Paramount also plans to add “amenity spaces” at One Market and One Front to attempt to lure new tenants, Brindley said on the call. The proposed upgrades were not disclosed.
He described market conditions in San Francisco as challenging given the amount of available offices in the city, but said Paramount had seen “a steady uptick” in leasing inquiries and office tours by would-be tenants.
The office vacancy in San Francisco is a stubborn 35.8 percent, according to CBRE. At the end of last year, One Market was 90.1 percent occupied, according to regulatory filings. Since Google took up a fifth of the complex, its departure is expected to lower the occupancy to 72 percent.
Simpson Thacher will absorb nearly 10 percent of Google’s former footprint there, softening the blow, according to the Business Times.
The One Market complex is one of three properties, the other two in Manhattan, that generate nearly two-thirds of Paramount’s total revenue, according to regulatory filings.
A year ago, appraisers slashed the value of the San Francisco property on the Embarcadero by more than $500 million. The unidentified appraisers put the value of One Market Plaza at $1.25 billion, from $1.76 billion in 2016.
— Dana Bartholomew
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