Aug. 1 (Bloomberg) -- Yahoo Inc. said it will take space at Hearst Corp.’s San Francisco Chronicle building in the city’s South of Market neighborhood, putting it closer to an area of rapid growth that’s home to technology companies.
Yahoo, operator of the biggest U.S. Web portal, will move its San Francisco workers from a financial district high-rise to an undisclosed amount of space at the property, according to a post today on its Tumblr website. The Sunnyvale, California-based company plans to increase hiring in the city, said Jacqueline Reses, Yahoo’s chief development officer.
“We’re designing a cool, fun and beautiful space to inspire collaboration and innovation,” Reses said.
The move will give Yahoo a Mission Street address that is between the Central Market redevelopment area, which has lured technology companies including Twitter Inc., and the southern part of the traditional financial district, where projects such as new towers by Boston Properties Inc. and Kilroy Realty Corp. are under way. The Central Market area is also home to the Warfield, Orpheum and Golden Gate theaters that hold live shows.
The three-level Chronicle building at 901 Mission St. is home to the city’s largest circulating daily newspaper, which has roots dating to 1865. The building used to be occupied by two floors of newspaper employees before the publication was reduced in size and staff because of plunging advertising revenue, largely because of competition from the Internet.
Parts of the first, second and third floors have been converted to offices and meeting space for technology companies including Square Inc., the mobile-payment service started by Twitter co-founder Jack Dorsey. Square is moving to larger quarters at 1455 Market St., near San Francisco’s City Hall and opera house, in a former Bank of America Corp. data center owned by Hudson Pacific Properties Inc., a Los Angeles-based real estate investment trust.
The Yahoo deal is for five years and 70,000 square feet (6,500 square meters), said a person with knowledge of the agreement who asked not to be identified because the information is private. Asking rents in the area averaged $44 a square foot in the second quarter, according to CBRE Group Inc.
Yahoo’s current lease at 475 Sansome St. was signed in 2010 at a rate of $32 a square foot, and expires in the third quarter of next year, said a person familiar with that agreement who also asked not to be identified because the lease details aren’t public.
Sara Gorman, a Yahoo spokeswoman, declined to comment on the company’s lease terms. Jeffrey Johnson, the Chronicle newspaper’s publisher, and Brennan Zerbe, a spokesman for Hearst based in San Francisco, didn’t return calls seeking comment on the space being taken by Yahoo.
This isn’t Yahoo’s first move into a property known for its ties to old media. The company, led by Chief Executive Officer Marissa Mayer, in May announced plans to lease four floors in the former New York Times building in Manhattan.
“We love the symbolism of moving into the Chronicle building, as it personifies the digital revolution in how people around the world consume media,” Reses said.
Rent growth in San Francisco has slowed amid decelerating leasing by technology companies that fueled three years of record occupancy, according to a Cornish & Carey Commercial Newmark Knight Frank report. Asking rates in the city rose 1.2 percent to an average of $54.59 a square foot at the end of June, the smallest quarterly increase since 2010, the brokerage said.
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