Oct. 3 (Bloomberg) -- Twitter Inc., the microblogging site planning an initial public offering, is in talks to lease a 320,000-square-foot office adjacent to its San Francisco headquarters, said people with knowledge of the discussions.
Twitter is the only current suitor for 1 Tenth St. in the city’s Central Market redevelopment area, said one of the people, who asked not to be identified because the matter is private. The building is owned by Shorenstein Properties LLC, also the landlord of Twitter’s current office at 1355 Market St. No deal has been signed and the discussions could fall apart, the person said.
Twitter, preparing to hold one of the largest technology IPOs since Facebook Inc., may use some of the cash it raises to expand and accommodate its workforce. Leasing the renovated office at 1 Tenth St. would more than double Twitter’s current San Francisco footprint of 295,000 square feet, according to data from broker CBRE Group Inc.
Chief Executive Officer Dick Costolo has led a hiring spree that’s more than tripled the company’s size to 2,000 employees, up from 600 in early 2011, poaching top engineers and managers from Internet rivals including Google Inc. The growth comes as Twitter’s advertising revenue -- marketers pay for short marketing messages to appear in users’ news feeds -- is projected to rise 63 percent to $950 million next year from $583 million this year, according to EMarketer Inc.
About three quarters of Twitter’s employees work from its Market Street headquarters, a renovated 1930s furniture mart that also houses Internet companies including online retailer One Kings Lane Inc. The annex behind it at 1 Tenth St. was constructed in the 1970s with a masonry cladding that’s being stripped away and resurfaced with glass for occupancy in early 2014.
Gabriel Stricker, a spokesman for Twitter, declined to comment. Tom McDonnell, a Shorenstein executive, also declined to comment.
Twitter relocated to the Central Market area in June 2012, helping to revive the blighted neighborhood and paving the way for moves by technology firms including mobile-payments company Square Inc. to the area.
Technology companies are leading an office trend that’s housing more workers in less space, according to Steve Barker, branch manager for commercial broker Studley Inc. Mobile devices that allow business to be conducted away from a desk and online storage of files has reduced the space requirement to about one employee per 170 square feet, he said.
By that estimate, Twitter’s current headquarters would accommodate about 1,735 workers and 1 Tenth St. would hold as much as 1,882.
Average office rents in the Central Market district, on Market Street between Fifth Street and Van Ness Avenue are about $46 a square foot, with the best buildings including Twitter’s art deco headquarters asking $57 a square foot, CBRE data show. At those prices, a new lease at 1 Tenth St. could cost $15 million to $18 million annually.
--Editors: Pui-Wing Tam, Jillian Ward