Big Finance Firms Renew San Francisco Leases

Goldman Sachs and Bank of America recommitted to a downtown skyscraper owned by Vornado Realty Trust and the Trump Organization.
555 Washington St. Image via Google Street View

San Francisco’s office market is grappling with soaring vacancies as the city remains on lockdown, but Vornado Realty Trust and the Trump Organization managed to secure major lease renewals at a trophy skyscraper they own in the Financial District.

Goldman Sachs renewed its entire 90,000-square-foot lease at 555 California St., while Bank of America decided to consolidate all of its San Francisco offices into its existing 247,000 square feet at the tower, adding 10 years to its current lease term. The renewals, which took place last year, were just revealed by Vornado’s President Michael Franco during the REIT’s fourth quarter earnings call.


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Franco noted that Bank of America’s renewal, which brings its lease expiration to 2035, was the largest lease deal inked in the city in 2020. The commitments by the financial services giants make up two of the four renewal transactions “recently” completed by Vornado at the 52-story tower.

Built in 1969, 555 California St. offers 1.5 million square feet as part of a three-building, 1.8 million-square-foot office complex between Montgomery and Kearney Streets. The tower is 30 percent owned by the Trump Organization, which partnered with Vornado to acquire the complex from Hudson Waterfront Associates in 2007.

Formerly known as the Bank of America Center, the modernist skyscraper was owned by the bank until 1985 and served as its world headquarters until 1998. Other major tenants of the LEED Gold-certified tower include Jones Day, McKinsey & Co., Microsoft, Morgan Stanley and UBS, according to a property brochure from Vornado.

Deals amid gloom

Franco said that the Goldman Sachs renewal represented a 58.7 percent mark-to-market. The executive added that Vornado has never lost a major tenant at 555 California St. during its 14 years of ownership, and that the REIT has no leases expiring in San Francisco in 2021.

Overall office vacancy in the city reached 16.7 percent at the end of the fourth quarter, up 11 percentage points from the previous year and up 300 basis points from the third quarter, according to a report by Cushman & Wakefield. That rate surpassed San Francisco’s peak vacancy level following the 2008 financial crisis.

The brokerage pointed out that subleases are the primary driver of new vacancy, accounting for 52 percent of all vacant space in the city, whereas Class A direct vacancy in the CBD has been less affected. The latter increased to 6.5 percent at the end of 2020, up 280 basis points since the COVID-19 outbreak began in March.