Running counter to the narrative of large businesses shedding office space in downtown San Francisco, the tech firm Rakuten International said Monday it was moving into larger digs in less “outdated” space in a tower south of Market Street just blocks away from its now-former home.
Rakuten, a San Mateo-based company owned by the giant Tokyo-based Rakuten Group, said it was moving almost 160 employees into 29,000 square feet on the 18th floor of 300 Mission St.
The company, known as the jersey-badge sponsor of the Golden State Warriors and for its cash-back program for online purchases, among other offerings, has more than 550 employees in the Bay Area, a spokesman said.
Rakuten International’s new office space, which was remodeled relatively recently, is more “modern” and conducive to collaboration and large meetings than its old offices, which were spread across 24,000 square feet on two floors at 160 Spear Street, where the company had been for nine years, officials said.
“It’s a pretty massive upgrade in the experience for our employees, as well as our visitors,” said Rakuten International CEO Amit Patel, who told of staff confabs being held in the old office’s kitchen.
Rakuten International signed a two-year deal to sublease its new space from Glassdoor, another technology company that runs a job-search and recruiting platform.
Company officials declined to discuss financial terms but said there is an option to extend through 2030, which Patel said indicates Rakuten’s commitment to The City.
The new space has more conference rooms, small-group collaboration space and amenities, Patel said. It’s in a building that features large floors of approximately 30,000 square feet, underground parking, a landscaped outdoor plaza and close proximity to the Montgomery Street BART station and the Salesforce Transbay Transit Center.
Such attractions inside and out appear increasingly important to engage workers who have only gradually returned to offices in greater numbers — often under orders — after the dramatic rise of remote work turbocharged by COVID-19 and stay-at-home mandates.
Average occupancy of offices in the San Francisco metro area has consistently been less than 50 percent since 2020, among the lowest of ten surveyed cities, according to building badge swipes counted by security company Kastle Systems.
Rakuten International’s announcement came after a fourth quarter in which preliminary data from the commercial real-estate firm CBRE showed the amount of vacant office space in San Francisco rose to a record high of 35.9%, though leasing activity picked up at the start of the quarter.
Some companies didn’t renew leases, and several large subleases were placed on the market during the period, said Colin Yasukochi, executive director of CBRE’s Tech Insights Center.
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It looked like rents dropped 7.7% over the prior year, he said.
Yasukochi predicted that San Francisco’s vacancy rate would continue to rise and rents would moderately decline for the first half of the year, after which he expected the office market to stabilize and begin to recover as economic conditions improve and interest rates decline.
In Rakuten International’s case, Patel detailed in a LinkedIn post last March that he was requiring employees to be in the office at least three days per week, saying that in-person work was vital to the company’s success.
That was the first time company employees had been asked to come into the office since March 2020, and Patel offered a new benefit: Employees could work anywhere in July. A company spokesman said Monday that employees typically are expected to come in Tuesdays through Thursdays.
Patel said that when the old lease ended, he could have brought the San Francisco employees to his company’s San Mateo headquarters, which Rakuten owns and has onsite amenities such as food service and a gym.
“We have everything there,” he said. “Plenty of space.”
However, Patel said, he decided that it was important to have a presence in The City, which he called “exciting, beautiful and tech-forward,” for a variety of reasons, including employee access.
Another motivation for keeping a San Francisco office was to support small neighboring businesses, which have suffered from a lack of traffic because of absent office workers.
“I would much rather be part of the solution than part of the problem,” he said. “So maybe we’re a small part of the solution. I don’t expect things to get any better anytime soon, but I hope this is really just a part of the journey, as many cities have experienced.”
Meanwhile, Brittan Hawken of the real estate company JLL, who represented Rakuten in its lease deal, insisted things were looking up.
“There’s definitely plenty of venture-backed companies and technology companies that are actually doubling down or continuing to invest in The City,” Hawken said.
