Google will shrink its space at 215 Fremont Street in downtown San Francisco by 54% as part of a lease extension, the latest downsizing of the tech giant's office space.

Google will lease 64,000 square feet, up from 140,000 square feet as of now. Clarion Partners and LPC West bought the building in 2019, the San Francisco Chronicle reported.

The smaller lease reflects other deals in the Bay Area as companies rethink their space needs in the new hybrid work environment.

“Due to the remote/hybrid environment that many tech companies adopted during the pandemic, less space was needed,” said Robert Sammons, senior research director at Cushman & Wakefield Bisnow by email. “It appears that the consolidation of the larger technology companies in San Francisco has largely already occurred.”

He said the trend started in 2021.

Google has again reduced its office operations in downtown San Francisco.

Like their counterparts in the technology industry, Google employees work from home or have a hybrid work schedule rather than spending five days a week in the office.

early May Bisnow reported that Google plans to vacate 28,000 square feet in the landmark One Market Plaza building, a 140,000-square-foot prestige office complex in downtown.

The move came as part of the company's decision to consolidate operations at 345 Spear St. and other nearby buildings, Google spokesman Ryan Lamont said Bisnow in May.

Despite the consolidations, Google still has a strong presence in San Francisco, leasing offices at the Landmark at One Market, the Ferry Building, Hills Plaza and One Maritime Plaza, the Chronicle reported. However, the tech giant is no longer gobbling up as much space as it did before the pandemic.

“As we have said before, we are focused on investing efficiently in real estate to meet the current and future needs of our hybrid workforce,” Lamont wrote in an email to Bisnow Early May. “We remain committed to our long-term presence in San Francisco.”

According to C&W data, the vacancy rate for prime buildings in San Francisco hit a new record of 34.5% in the second quarter. While rents are significantly lower than pre-pandemic levels, they remained stable at $73 per square foot on a quarterly basis.

“As AI companies move more toward an office environment and other technology companies are now adopting at least a hybrid environment, utilization should improve,” Sammons said.

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