When Airbnb reported a net loss of $1.17 billion for Q1 last week, it also disclosed in its shareholder letter that this loss included a $113 million

Airbnb Shows How San Francisco’s Office Shortage Is Suddenly a Historic Glut: Hogging Vacant Space for a Future that Never Came

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2021-05-21 05:00:09

When Airbnb reported a net loss of $1.17 billion for Q1 last week, it also disclosed in its shareholder letter that this loss included a $113 million expense that it expects as it is trying to “exit” an office lease in San Francisco “that we deemed no longer necessary given our restructuring and cost cutting efforts.”

The $113 million expense represents its estimate of the difference between what it would get by subleasing the space to new tenants and what it will have to pay the landlord and related expenses over the remaining term of the lease. But that’s a cheaper way out than letting it sit vacant and paying the landlord until the lease terminates.

What’s fascinating about this is just how much office space Airbnb had secured with long-term office leases during the years of the so-called office shortage that it never even occupied, and that by leasing office space that it didn’t need, it had further increased the office shortage at the time.

Airbnb’s disclosure relates to its 287,000 square feet (sf) at 650 Townsend St. in the South of Market area. According to the San Francisco Business Times, Airbnb had leased the space in 2017 for a term of nine years. But it only ever occupied 170,000 sf of it. The rest had remained vacant for all these years.