Coinbase, after eschewing a corporate real estate presence just a few years ago, is now on an office expansion streak.
Within weeks of re-establishing its San Francisco-based headquarters, the cryptocurrency platform has signed on to fill a 58,600-square-foot space in Charlotte, North Carolina, one of the nation's most established financial hubs. The deal to fill two complete floors at the recently completed 110 East project will boost the roughly 370,000-square-foot development — which completed construction last year — to nearly 37% leased.
The deal between Coinbase and developer Shorenstein is the latest in a string of deals for the 24-story tower and means the San Francisco landlord has collectively landed upward of 115,000 square feet of leases within the past 30 days, including a recent 40,000-square-foot agreement with SouthState Bank.
In a move expected to reinforce the city's burgeoning reputation as a hotspot among financial tech companies, Coinbase will hire more than 130 employees to fuel its regional expansion, coinciding with its broader plan to bring on more than 1,000 people across the United States as it continues to stretch its national footprint.
The decision to establish a hub in Charlotte is especially notable for Coinbase, the largest cryptocurrency exchange in the United States, given its aim to better align the company with other traditional banks and financial services firms. What's more, as the Trump administration loosens regulatory constraints on the cryptocurrency market, institutions such as Charlotte-based Bank of America have even pointed to the possibility of dipping a toe into more crypto-related services as the market takes on a larger role in the country's financial markets.
“We think that every major bank is going to be integrating crypto at some point," Coinbase CEO Brain Armstrong told analysts on the company's latest earnings call. "It’s technology to update the financial system. We can power a variety of things for them."
Supported growth mode
In the years since it paid tens of millions of dollars to officially ditch its global headquarters after the onset of the pandemic, the cryptocurrency exchange has been on a growth spurt with a number of high-profile office deals.
Last month it finalized a deal for more than 150,670 square feet at San Francisco's Mission Rock development to help fill one of several office properties being constructed through a partnership between development giant Tishman Speyer and the MLB's San Francisco Giants along the city's waterfront. The lease was signed to replant its corporate flag in the city and marked one of the largest office deals in San Francisco since the start of the pandemic.
Coinbase's national expansion plans are unfolding in large part because of recent policy shifts from the federal government in support of the crypto industry. The company's growth and recent real estate investments have been in response to what Armstrong described as a "pro-crypto administration."
The company's deals in both San Francisco and Charlotte also underscore the strengthening trend among tenants that are prioritizing spaces in the newest and nicest options available.
The demand for quality office space in Charlotte and elsewhere across the country far exceeds that for lower-tier options, creating a widening gulf between the two classes in terms of occupancy, rents and leasing demand.
Unlike major United States markets, however, Charlotte experienced an unprecedented burst of new construction that has collectively added about 6 million square feet of top-quality office space over the past half decade, said Chuck McShane, CoStar's senior director of market analytics for the Charlotte area. Of that total, about 1.2 million square feet was completed last year alone, he added, making it tough for developers such as Shorenstein that are competing for a smaller, post-pandemic pool of tenants that have plenty of options to choose from.
With the nation's barren development pipeline and a steady pickup in leasing, however, there's an emerging sense of urgency among companies that are weighing expansions or the chance to swap out their current space for a nicer option. While vacancy is still stuck at a record high of about 14%, new leasing volume across the country finally hit its pre-pandemic average of about 115 million square feet by the end of the first quarter this year, according to CoStar data, the bulk of which has been concentrated among premium office properties.
And with an anticipated bump in full- or multi-floor requirements among tenants shopping in the Charlotte market, McShane said buildings such as 110 East will be ready to capitalize on the rebounding demand.
Already this year, tenants have collectively signed more than 250,000 square feet of leases in buildings constructed over the past five years, according to CoStar data. That figure is well on its way to surpassing the less than 375,000 square feet signed throughout the entirety of 2024.
For the record
JLL's Conor Brennan represented Coinbase in the deal with Shorenstein, while a Trinity Partners team including Jennifer Kurz, John Hannon and Rhea Greene represented the landlord.