Chevron is once again looking to whittle its previously vast corporate footprint in the San Francisco Bay Area in the aftermath of relocating its headquarters to Texas.
The second-largest U.S. energy producer and seller by stock market value has listed for sublease all of its office space at 5001 Executive Parkway, a nearly 400,000-square-foot chunk in San Ramon that had served as Chevron's corporate hub for the past couple of years.
The listing, which hit the market this month, is available through a term that extends to the end of October 2033, according to marketing materials viewed by CoStar News. It serves as the latest downsizing move the company has made over the past half decade as it has dramatically shrunk its long-time presence in the region.
Chevron confirmed bubbling concerns over the future of its corporate presence in the East Bay area last summer when it unveiled plans to officially relocate its headquarters to Texas. The company last year said it would gradually transition all "corporate functions" to Houston over the next five years, a decision that left the future of its offices in San Ramon up in the air.
The company had only recently moved into the roughly 400,000-square-foot office space at the sprawling Bishop Ranch — an East Bay campus about 35 miles east of San Francisco — after it sold its 1.3 million-square-foot former headquarters, also in San Ramon, to Sunset Development Co. for $175 million in 2022.
The move to the 5001 Executive Parkway Building in 2022 represented a roughly 1 million-square-foot reduction in Chevron's corporate portfolio in the region as it continued to shift the bulk of its operations out of the state.
Neither Chevron nor representatives for Sunset Development responded to CoStar News' requests for comment.
Shrinking footprint
Chevron's presence in the Bay Area dates back to its predecessor firm, the Pacific Coast Oil Co., which was founded in San Francisco in the late 1800s. The company in 2001 moved its headquarters across the bay to San Ramon as part of an earlier wave of headquarters relocations out of the city. Chevron merged with Texaco that same year, a deal that came with a substantial real estate presence in Houston.
Its dramatic San Ramon reduction has coincided with a yearslong effort to shrink its California workforce and expand its Texas operations.
The energy giant is trying to shift more employees to two towers it owns in downtown Houston that were formerly the headquarters of the now-defunct energy provider Enron Corp. The 50-story, 1.25 million-square-foot tower at 1400 Smith St. in Houston is connected by a circular pedestrian glass walkway to the 40-story, 1.16 million-square-foot tower at 1500 Louisiana St.
Chevron's Houston offices house more than 6,000 employees, the result of years of moving the bulk of its California workforce to Texas. The company will continue to operate one of its largest refineries in Richmond, California, which employs about 3,000 workers and is about 20 minutes north of the San Ramon campus.
While Chevron's sublet listing is a significant weight on the East Bay office market's attempts at a post-pandemic rebound, it lands at a point when more tenants are signing on for space in the region.
Bishop Ranch recently landed a lease with skincare company Face Reality in which it would relocate its corporate headquarters to a nearly 40,000-square-foot space at the $5 billion master-planned campus. The deal was part of a flurry of other office agreements landlord Sunset Development has landed since the start of the year, activity that has totaled 15 new leases and more than 35 renewals.
New leasing volume at Bishop Ranch has totaled more than 254,000 square feet over the past six months, Sunset Development executives said, adding that the firm has noticed a "dramatic increase" in lease lengths compared to the earlier years of the pandemic.
"As we see signs of optimism returning to the Bay Area market, companies are making strategic, long-term investments in office environments that support collaboration, community and culture," Andrea Reeder, senior vice president and director of leasing at Bishop Ranch, said in a statement. "They understand that while large square footage isn't always needed day to day, creating a meaningful workplace experience, beyond just four walls, matters more than ever."
The office outlook for the broader East Bay area is also getting a bit brighter as leasing momentum takes hold and tenants become increasingly clear about their future spatial needs.
About 3.5 million square feet of sublet space is sitting on the market, according to CoStar data, a roughly 17% share of the total amount of available office space across the East Bay region. That ratio has steadily fallen since its late 2020 peak when sublease space accounted for more than 22% of the region's availability, one of the earlier indicators of the market's slow but steady stabilization.