Microsoft is the latest tech giant to announce plans to sublease office space in San Francisco, a sign that cost-cutting is continuing in the sector. The company has listed up to 49,000 square feet of space in the city’s tallest tower, 555 California St., for sublease through May 2029.
The move comes just weeks after Microsoft opened a new artificial intelligence lab in the same building, where it is offering free co-working space for clients. However, the company is also laying off employees, with its LinkedIn subsidiary recently cutting 668 jobs.
The 779-foot-tall 555 California St. is owned by Vornado Realty Trust and former President Donald Trump. The building is still mostly leased, with tenants including Goldman Sachs, Morgan Stanley, McKinsey & Co., and KKR. However, the recent subleases by Microsoft and other tech companies are a sign that the office market in San Francisco is softening.
Microsoft’s decision to sublease office space is a reflection of the broader trend of tech companies downsizing their physical presence in San Francisco. The city’s office vacancy rate hit a record-high 34 per cent in September, as more and more employees continue to work remotely.
Other tech giants that have subleased office space in San Francisco in recent months include Meta and LinkedIn.
The sources for this piece include an article in SFChronicle.