In yet another case of San Francisco “stealing the show” from Silicon Valley, visual interest site Pinterest has just moved its headquarters from Palo Alto to San Francisco’s South-of-Market (SoMa) neighborhood.
It was only in May that venture firm Benchmark Capital made a similar long-term move into the city, on the premise that two-thirds of its recent deals were based there anyway. While Benchmark’s office are north of SoMa, Pinterest’s more immediate neighbors will include social gaming dynamo Zynga and online room rental startup AirBnB, all cozied into the repurposed warehouses and lofts that define the district.
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Pinterest has skyrocketed to success in the past year, becoming the fastest standalone website to hit 10 million users, according to comScore. With that momentum, it’s raised $100 million in 2012 from Andreesen Horowitz, Rankuten, FirstMark Capital, and Bessemer Venture Partners.
San Francisco Mayor Ed Lee, who has a Pinterest page of his own, has indicated that Pinterest will be in the city for the long-term. But the company has thus far only signed a short-term lease on 572 7th Street, a space that’s just large enough for Pinterest’s current workforce, estimated to be near 40 people (their team page, which lists 29, is outdated).
The company has been mum on long-term plans, declining our request for comments. The owner of the property however has been marketing the space as one property with the adjacent 808 Brannan, a much larger space that’s still being prepared for occupancy, according to this Planning Department document. Both buildings combined have about 55,000 square feet of office space that could accommodate nearly 200 employees. It’s likely that Pinterest is currently negotiating the lease on the latter property, making sure it can sublease the space (or parts of it) as it uses its newfound war-chest to expand its own staff and grow into the office.
Justin Bedecarre, who advises startups on office space for real estate firm Cushman & Wakefield, reckons that moving to San Francisco makes sense for a number of reasons, including access to a wider pool of Bay Area tech talent, more vibrant neighborhoods for employees to live in, a greater inventory of creative office spaces, and more transit options than the peninsula.
Pinterest is hardly alone in deciding to escape Palo Alto’s high rents and low vacancy. San Francisco is now home to a raft of popular companies, including Alphonso Labs, Twitter, One Kings Lane, Yammer, and ZenDesk, to name a few. Bedecarre says that rents in Downtown Palo Alto are “still 30-50% higher over San Francisco’s SoMa district,” with certain firms like data mining and security company Palantir placing a chokehold on the surrounding real estate with all the space it’s leased.