Tech Firm Pays $89.5M to Cancel Office Lease

In an ominous sign for the commercial real estate market market, a social media company has decided to cough up $89.5 million instead of proceeding with a deal to rent new offices in San Francisco. The company cited the shift toward working from home for its decision to cancel its lease of space in the yet-to-be-constructed 88 Bluxome complex, reports the San Francisco Chronicle. Pinterest, which has around 2,200 employees around the world, says it will continue to rent its existing San Francisco offices. SFist estimates that if Pinterest hadn't paid the one-time fee to cancel the lease, it would have ended up paying around $440 million for offices that would have remained largely empty.

"As we analyze how our workplace will change in a post-COVID world, we are specifically rethinking where future employees could be based," Pinterest Chief Financial Officer Todd Morgenfeld said in a statement Friday. "A more distributed workforce will give us the opportunity to hire people from a wider range of backgrounds and experiences." Other Bay Area tech companies have said working from home is likely to remain the norm after the pandemic, with Twitter telling employees they never have to return to the office. A recent Stanford Institute for Economic Policy Research found that 42% of the US labor force now works remotely and around a third are out of work, leaving only around 26% working from offices and other sites, the Sacramento Bee reports (More Pinterest stories.)