Published in San Francisco Business Times by Brian Rinker, July 13, 2021
One reason to sign a commercial lease in the ghost town that was once San Francisco’s bustling Financial District is for the sweet deals.
At least that’s a big part of why Elements Global Services, an HR startup that manages technology companies’ international employees, took out a lease on a 6,500-square-foot office on Pine Street in the heart of San Francisco. The new office, which opens at the end of the month and will house about 30 employees, will serve as the Chicago-based company’s West Coast regional headquarters.
“It’s a buyers market, absolutely,” said Rick Hammell, founder and CEO of Elements Global Services. “We did a great renovation. It’s a beautiful space.”
He didn’t disclose specific leasing terms but did say the location was a steal that included a buildout in the deal. Elements had been looking to expand from its headquarters in Chicago to meet the needs of its growing roster of West Coast-based technology clients.
Hammell said the startup was in the process of negotiating offers in Seattle and Los Angeles as well, but in the end, found San Francisco to be the best value.
“To clarify, it still wasn’t cheap,” he said, “but we felt like it was the better deal.”
Hammell was a bit surprised on the deal having heard so much over the years how expensive it is in San Francisco.
Even amid the reported so-called “techxodus” — where tech companies and their workers relocate to Austin, Denver, Miami or up into the cloud — Hammell views the Bay Area still as the premier innovation hub in the U.S. Sure, some companies have left for geographies with warmer weather, fewer taxes and more affordable rents, but plenty of Elements current clients and future clients operate in the Bay Area.
San Francisco commercial real estate brokers have been holding their breath for a year and a half waiting for the market to rebound. Though the city’s office vacancy hit a record high of 20%, demand for office space has been increasing recently. According to commercial real estate firm JLL, San Francisco saw 11 lease transactions over 50,000 square feet and more than 1.6 million square feet in leasing activity.
Though Elements’ move into the city is small in comparison to the overall picture, it’s nonetheless a bullish sign they’ve been praying for. And as more companies return to the office over the coming months, this could be the start of a positive trend for San Francisco’s suffering commercial sector.
Hammell told me the great San Francisco commercial deal was just one of the reasons it chose the city to set up shop.
The company, which was started in 2015 and backed with $20 million in venture capital, found that it would be easier to meet their clients’ needs if they were actually on the west coast, considering the time zone and cultural differences. The seven-year-old company, which has 300 clients and generates more than $300 million in annual revenue, has catered largely to the east coast and mid-west companies but has in recent years been growing a roster of tech companies out west. Hammell said he has noticed that west coast companies are more concerned with work-life balance and have more of an employee-first mentality. Another interesting west-coast, east-coast difference, is that out here, Hammell told me, companies require a bit more of a hands- relationship.
That of course is hard to do when you’re on thousands of miles away.
San Francisco is often criticized on social media and in the news for its homeless issues and crime. But neither of those impacts Hammell’s decision.
“Coming from Chicago or Atlanta, New York, I think every city has that,” he said. But he is hoping their contribution to the local economy will help lead to a revitalization of the area.
—Published in San Francisco Business Times by Brian Rinker, July 13, 2021