Autodesk scales back its Marin County, San Francisco offices as employees prefer hybrid workplace

Autodesk is downscaling its physical presence in San Francisco and Marin County, another sign of how some large Bay Area employers are reconfiguring their plans for the workplace in the pandemic.

Autodesk recently decided to consolidate some of the office space it occupies around its San Rafael headquarters and in San Francisco, according to a spokesperson. The software developer is exiting two locations — 3900 Civic Center Drive in north San Rafael and at 300 Mission St. in San Francisco — and consolidating employees into surrounding buildings.

“Rather than a departure, these two closures represent a reallocation of Autodesk’s investment in the San Francisco market,” wrote Stacy Doyle in an email. “We remain committed to our presence in the Bay Area.”

Company hiring during the pandemic has increased because of company growth and turnover, said to be below industry average, Doyle wrote. But the company has accelerated its “flexible workplace” program in recent months, working from quarterly input from workers.

“Based on insight gained via direct employee surveying, there is a growing preference to carry out individual work remotely, and conduct team meetings or collaboration-based work in offices,” Doyle wrote. That preference have been over half on some of those polls.

Autodesk announced the opening of the 117,000-square-foot office at 300 Mission last year, and the lease for the nearly 47,000-square-foot 3900 Civic Center building commenced at the beginning of 2020, according to San Francisco Business Times and North Bay Business Journal reporting.

According to its latest annual report, the company’s San Rafael facilities included about 162,000 square feet under leases with expiration dates ranging from December 2021 to December 2024, and its San Francisco facilities consisted of around 284,000 square feet of leases with expiring December 2022 to June 2026. Corporate real estate totaled 2.1 million square feet in 100 U.S. and global locations.

In its fiscal third-quarter report, released in early December, the company said it expected to take a roughly $180 million impairment charge for the adjustments to its real estate because of the pandemic.

While larger employers in the Bay Area and Marin generally are being more cautious about their plans to reoccupy their offices, a number of smaller firms have been getting back together in their corporate spaces, according to Whitney Strotz, who oversees commercial real estate firm Cushman & Wakefield’s San Rafael location.

“This recent spike in omicron seems to be putting things on hold in the short term, as we go through a relatively steep spike in cases,” Strotz said about large companies’ plans to expand their local real estate. But rather than nixing those goals, those employers tend to be slow-rolling their site searches, he said.

One trend in those site searches that has been gaining momentum in the pandemic is the shift from central offices in urban areas to a hub-and-spoke model, with a smaller central office there plus even smaller satellite locations in surrounding suburbs closer to the employees’ homes, according to Strotz.

He’s currently working with a handful of San Francisco firms that are looking for multiple locations of about 4,000–5,000 square feet in Bay Area suburbs.

“Sales organizations have seen success with this model for a long time,” Strotz said. That arrangement typically includes a regional office staffed with a management, human resources and operational support, then small offices in surrounding markets. “What’s different now is we are seeing other kings of organizations looking for similar space.”

Haden Ongaro, who leads Newmark’s North Bay commercial real estate brokerage team from San Rafael, said the rebound of rents and occupancy rates in higher-class office space in Silicon Valley, San Francisco “viewspace” (with window views above surrounding buildings) and southern Marin prime complexes are signs of the market for such space is recovering.

“We are seeing a flight to quality in the Bay Area,” Ongaro said. “Buildings in southern Marin have done well and maintained high lease rates and low vacancy — in some cases below 5% available (to lease).“

One company that gave up sizable Marin County office space earlier in the pandemic was jobs online marketplace Glassdoor, which moved its headquarters to a San Francisco high-rise as part of a Bay Area consolidation. But the company’s 40,000-square-foot former head office at 160 Shoreline Parkway in Mill Valley is in late-stage negotiations with three undisclosed companies in various industries to occupy the space, according to Ongaro, who is part of the team brokering the deals. And one of those companies also is interested in adding another 15,000 square feet in an adjoining building.

Yet the 3900 Civic Center space Autodesk is moving out of may have a tougher time on the market, according to Strotz.

“Larger blocks of space have not seen as much action since COVID,” Strotz said. “That’s a soft spot in the market. Medium- and smaller-(sized) suites have seen the most action in the last 24 months. I’m hopeful that as we move from the pandemic to the endemic stage soon, we will see larger blocks get more interest again.”

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.