MENLO PARK — A tech company has signed a mammoth office deal in the South Bay, a transaction that is poised to provide a huge boost for the region’s economy, job market and commercial real estate sector.
Snowflake has subleased 773,000 square feet in Menlo Park, taking office buildings near the interchange of U.S. Highway 101 and State Route 84, according to several sources with close knowledge of the rental transaction.
100 Independence Drive, a Menlo Park office building. (Google Maps)
Facebook app owner Meta Platforms subleased the space to Snowflake, according to the sources.
The 773,000 square feet that Snowflake subleased from Meta is enough office space for 3,000 to 3,800 workers.
JLL commercial real estate brokers Mark Bodie, Toss Vallentine, Clarissa Richardson and Todd Husak; and CBRE commercial real estate brokers Luke Ogelsby, George Fox and Nick DeMartini teamed up to arrange the sublease deal.
Real estate experts believe the deal will provide a major boost for the South Bay commercial property sector, which is reeling from sky-high office vacancies, sluggish rental rates and widening loan delinquencies.
“This is good for the market,” said David Sandlin, an executive vice president with Colliers, a commercial real estate firm. “Leasing activity breeds more activity.”
It wasn’t immediately clear when Snowflake might move into the offices that it has subleased.
“This is such a positive event for the economy in Silicon Valley,” said Chad Leiker, a first vice president with Kidder Mathews, a commercial real estate firm.
Montana-based Snowflake has been expanding its operations in the Bay Area in recent years.
In 2022, Snowflake signed a lease in the East Bay for 153,000 square feet at an office site in Dublin.
“The Menlo Park deal shows that this is a great time for companies to be looking for offices,” Leiker said. “Landlords and tenants are both motivated to lease or sublease their spaces.”
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Snowflake has been seeking space beyond the 200,000 square feet that it currently occupies in San Mateo, stated The RegistrySF, a real estate news site that was the first to report that Snowflake has reached a sublease deal in Menlo Park.
The deal arrives at a time when it appears more tenants are seeking larger office spaces of 20,000 square feet or more to occupy.
“We are seeing a 25% to 30% increase in requirements by these larger tenants,” Sandlin said. “You could see more of these larger deals.”
This news organization requested a comment from Snowflake regarding its rental deal in Menlo Park. JLL broker Bodie declined to comment about the transaction.
What is certain is the Snowflake rental deal in Menlo Park is a welcome counterpoint to the forbidding trends that have haunted the Bay Area office markets since the coronavirus outbreak and resulting business shutdowns that began in March 2020.
“This is a big deal,” Leiker said. “Everyone has been singing the sad song about the office market in Silicon Valley. Now somebody comes along and takes three-quarters of a million square feet. That puts a nice dent in the vacancies.”
