Week of February 14, 2000
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DHL Airways Flies Coop, Relocates HQ in San Francisco

Few firms would consider a headquarters relocation to San Francisco a cost-saving step. Apparently that's the case, though, when the location you're leaving is Silicon Valley. DHL Airways (www.dhl.com) is packing up its headquarters in Redwood Shores, Calif., and heading for San Francisco after the company's current landlord tried to jack up its rent by 100 percent, according to DHL officials.

"This move will relocate DHL and its 550 headquarters employees to one of the most vibrant and exciting cities in the country," said Vic Guinasso, president and CEO of DHL Airways, Inc. "It will offer us immediate access to other businesses as well as significant amenities for our employees."

70 Percent Savings over 10 Years?

It will also offer dramatically lower costs.

DHL officials, in fact, said that moving to San Francisco will save the company more than 30 percent in rental costs in the first year of operations alone.

And over the life of the new, 10-year lease it's signed, DHL says it will save more than 70 percent compared to the occupancy costs it would have racked up at its current Silicon Valley location, next door to Oracle's gleaming headquarters. Catherine Morrison, DHL's director of corporate real estate, said, "The Redwood Shores real estate market is very hot, and it's very expensive.''

'Corporate Relocation Experts'
To Help with December 2000 Move

But the Valley's loss of DHL, recently named by Global Finance magazine as the "World's Most Global Company," is San Fran's gain.

Located downtown at 50 California Street, at the corner of California and Davis Streets, the new office will make DHL one of the largest corporations headquartered in San Francisco. The new headquarters will be situated in a 36-floor building built approximately 30 years ago. DHL will lease five floors and will be the largest of several tenants in the building. The company also plans to establish a full-service express center in the lobby of the new facility.

DHL will begin its move in December 2000, when the five-year lease on its current Redwood Shores location expires. To ensure "a smooth transition," a "team of corporate relocation experts," will be hired to assist with planning and preparation for the move to the new headquarters, DHL officials explained. As of this writing, though, DHL had not released any details as to which companies will be involved in assisting with the relocation.

DHL certainly seems to have had ample real estate savvy in negotiating the deal for its new San Francisco headquarters. Company officials won't disclose much DHL will be paying at its new location. Some local sources, however, say that DHL may be paying as low at US$45 a square foot, which, if true, would be $10 less per square foot than the going rate in Redwood Shores rental costs.

E-Trade, Aon Also Migrating

DHL is not alone among area companies seeing downtown San Francisco as a lower-cost alternative. In fact, more than a few are finding a lot of logic in another part of DHL's relocation reasoning - namely, that the San Francisco area is where most of its employees can afford to live and, therefore, relocation would give workers a quality-of-life plus.

For example, online broker E-Trade Group, which is headquartered in the Valley in Menlo Park, has announced that it plans to move some of its operations to nearly 150,000 sq. ft. (13,500 sq. m.) of space located south of Market.

Another player in the back-to-the-city parade is insurance giant Aon Corp., which also recently announced that it will consolidate many of its Bay Area operations on seven floors of the new 29-story office tower in San Francisco.

And rumors within the Greater San Francisco Bay real estate community also have it that Valley-based giants Cisco Systems and 3Com have been quietly inquiring about real estate in San Francisco.

For some, though, the cost-cutting relocation drift runs inland. Chevron, for example, reported in late 1999 that it made $189 million by selling its headquarters buildings in San Francisco's Financial District. Most of Chevron's employees are moving to space in the East Bay.

©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.