KPMG Reimagines Bay Area Presence with Major Office Move

Updated on: October 11, 2024 11:37 pm GMT

KPMG to Downsize San Francisco Office After Two Decades

KPMG, one of the leading global professional services firms, is making significant changes to its real estate footprint in San Francisco. The company has announced that it will relocate from its current headquarters at 55 Second Street, a move reflecting not only a shift in workspace needs but also broader trends in commercial real estate.

Relocation Details

KPMG is set to transition to a smaller office space at 505 Howard Street, known as Foundry Square III, by September 2026. Here are the key points regarding this move:

• Current Location: KPMG has occupied the KPMG Building at 55 Second Street for 20 years.
• Current Lease Size: The firm currently leases 143,000 square feet.
• New Lease Size: The new office will be approximately 96,300 square feet.
• Lease Duration: While specific terms of the new lease have not been disclosed, KPMG has described it as long-term.

The decision to downsize follows a broader trend in the corporate sector, where many firms are reevaluating their workspace needs post-pandemic. KPMG’s move is part of this evolving landscape, as many companies are looking to optimize their real estate investments in response to changes in work practices.

Market Context

The commercial real estate market in San Francisco has seen fluctuating demand, with a notable increase in vacancy rates. According to recent data from Cushman & Wakefield, the Financial District reported an office vacancy rate of 33.4% in the second quarter of 2024. This signifies a challenging environment for property owners and landlords.

In addition to KPMG’s move, there have been other significant shifts within the Bay Area:

• Elf Beauty is expanding its presence in Oakland with a new 27,800 square foot lease at 601 12th Street.
• Axiad, a tech firm, has relocated from Santa Clara to a 5,000 square foot office in Metro Plaza, San Jose.
• A San Ramon-based developer acquired a 20-story office tower in Oakland, highlighting ongoing interest in commercial properties despite previously mentioned challenges.

Implications of Relocation

KPMG’s downsizing may create ripple effects in the commercial real estate market, particularly in the Financial District. Here are some potential impacts to consider:

• Increased Vacancy: With KPMG leaving a substantial amount of space, the area may experience heightened vacancy rates.
• Shifts in Demand: Businesses may begin to seek smaller, more flexible office layouts, reflecting the changing nature of work.
• Potential for Renovations: Landlords may look into renovations or reconfigurations of existing spaces to attract new tenants.

Conclusion

KPMG’s move to a new office is emblematic of the changing landscape in commercial real estate, especially within a major urban area like San Francisco. As businesses adapt to new operational requirements and employee preferences, the implications of such relocations will likely be felt across the market. The firm’s decision underscores the need for companies to reassess their real estate strategies to align with evolving work patterns.

KPMG is moving to a new place, and this change shows how big companies are changing all around us.