Elon Musk Announces To Vacate X’s HQ In San Francisco, Will Relocate Employees To San Jose

Employees will be relocated to a new office in San Jose and an engineering office in Palo Alto, which will be shared with Musk's xAI startup, the Times reports. This move signals a definitive shift for one of San Francisco’s most iconic tech companies, which has been pivotal during significant events like presidential elections and the Olympics.

In the memo, Yaccarino emphasized the importance of the decision, stating, “This is an important decision that impacts many of you, but it is the right one for our company in the long term.”

Last month, the Chronicle reported that X was looking to sublease most of its San Francisco office space. Shortly after, Musk announced plans to relocate X and SpaceX’s headquarters to Texas, though he provided no specifics about maintaining a presence in California.

The decision to keep X offices in Silicon Valley follows a similar strategy to Musk’s Tesla, which moved its headquarters to Austin but retains an engineering "second headquarters" in Palo Alto and a significant plant in Fremont. Chevron recently made a similar move, relocating its headquarters to Houston while keeping its California facilities operational.

Maintaining a hub in the Bay Area allows Musk to leverage the region’s vast tech talent pool, particularly in the burgeoning field of artificial intelligence. The timeline for opening an Austin office and the number of employees expected to move remains unclear.

X has occupied its Mid-Market headquarters, a historic former furniture mart, since 2011. The company has been reducing its office space following the pandemic’s shift to remote work and subsequent mass layoffs after Musk’s acquisition.

The building has seen several controversies since Musk’s takeover, including disputes over permits for bedroom installations and an unapproved rooftop "X" sign. Additionally, X’s landlord sued the company over alleged unpaid rent, although the case was dismissed in March.

X’s departure adds to the exodus of major tech firms from the Mid-Market area, following Uber, Reddit, and Block (formerly Square). The area has struggled with partial remote work policies for thousands of city, state, and federal employees, further exacerbating challenges.

The decline in office occupancy has severely impacted Mid-Market businesses, with sales tax revenue on some blocks plummeting by 80% between 2019 and 2023, according to city data.

San Francisco recently leased part of 1455 Market St., the former headquarters of Uber and Block, at a reduced rate compared to pre-pandemic prices. Real estate brokers suggest that the lower demand may attract a more diverse range of tenants benefiting from these discounts.

The current economic struggles in Mid-Market resemble the post-2009 recession period, which led to the approval of a controversial payroll tax break in 2011 that attracted Twitter and other tech firms like Dolby and Zendesk to the area. While the tax break expired in 2019 and initially boosted office occupancy, its impact on local businesses and street conditions was mixed, according to a Chronicle investigation.

To counter the economic downturn, local groups are now focusing on revitalizing Mid-Market through arts and cultural events, including a monthly block party.