Autodesk’s headquarters on McInnis Parkway in San Rafael. (Robert Tong/Marin Independent Journall)
Autodesk Inc. is closing its headquarters in San Rafael and reassigning its 578 remaining Marin employees to San Francisco.
The design software company, one of Marin’s most successful startups, notified the state Employment Development Department of its plans “as a courtesy and in an abundance of caution” in an Aug. 15 letter.
The letter stated that Autodesk’s San Rafael office at 111 McInnis Parkway will be closing for good effective Oct. 14.
“All 578 employees who are currently assigned to the San Rafael office will have their assigned office transferred to our office at the Landmark at One Market Street, San Francisco,” said Autodesk executive Rebecca Pearce.
The letter stated that most of these employees are now designated as hybrid workers and therefore do not have mandatory weekly in-office days. Only five employees are office based and will be required to work in the San Francisco office.
Autodesk spokeswoman Mary Garofalo said the company has “ramped up” a new workplace model that divides employees into three groups: office based, hybrid or home based.
“The majority of our global team falls within the hybrid category, meaning they split their time between their homes and local, commutable Autodesk offices,” Garofalo said. “At this time, Autodesk is not requiring employees to come into an office on any fixed or mandatory weekly schedule.”
Garofalo said Autodesk has 12,600 employees worldwide, but she declined to disclose how many of those employees work in the United States.
Reacting to the news of Autodesk’s move, Mike Blakeley, chief executive officer of the Marin Economic Forum, said, “It’s always a big deal if you lose a name brand business that has been an important part of the community.”
“Autodesk started here, grew up here, became a billion-dollar company here,” he said. “That is significant in terms of establishing that kind of business can start and grow in Marin County. It’s like losing a good neighbor.”
Autodesk was launched in 1982 by 13 programmers who pooled about $60,000 of their own money and worked out of co-founder John Walker’s two-bedroom home in Mill Valley.
The founders initially concentrated on developing a text editing program with spreadsheets before shifting their focus to a computer drawing program that was an instant hit at the COMEX trade show that November. The program would later become AutoCAD, the company’s flagship product and cash cow.
In the 2021 fiscal year, Autodesk reported a net profit of $497 million on revenue of $4.39 billion. Its software is used by a broad range of industries including the manufacturing, architecture, building, construction, media and entertainment sectors. The software has aided in the development of new technologies such as virtual reality, robotics and 3D printing.
Autodesk’s decision to close its San Rafael headquarters comes on the heels of the company’s disclosure in January that it was giving up leases at 3900 Civic Center Drive in northern San Rafael and at 300 Mission St. in San Francisco. Autodesk’s lease of 46,000 square feet at 3900 Civic Center Drive began in early 2020, and the company opened the 116,000-square-foot office at 300 Mission St. last year.
Autodesk stated in its 2022 annual report that “the COVID-19 pandemic has spurred changes in the way we work as we move to a more hybrid workforce resulting in an evaluation of our office space needs.”
Accordingly, the report said, Autodesk planned to reduce its facilities portfolio worldwide and had incurred “impairment and accelerated depreciation charges of $103.7 million to assets associated with its operating leases for real estate during the fiscal year ended January 31, 2022.” In finance, an impairment is defined as a permanent reduction in the value of a company asset.
Autodesk also said it expects to incur additional impairments over the next several quarters amounting to as much as $25 million.
Between its annual reports in 2021 and 2022, the company shed 270,000 square feet of leased office space, leaving it with 1.83 million square feet at 101 sites in the United States and internationally.
Autodesk’s 2022 annual report indicated that its lease on the space at 111 McInnis Parkway extends until December 2024. It said the company has 284,000 square feet of space in San Francisco under leases that have expiration dates ranging from December 2022 to June 2026.
Regarding the 162,000 square feet of space that Autodesk has exited in Marin recently, Haden Ongaro, a North Bay executive for the Newmark real estate services firm, said, “I’m confident we’ll be able to lease those spaces but I hate to see a major employer leave Marin.”
Ongaro noted that Autodesk moved from Sausalito to the new building at 111 McInnis Parkway in 1994.
“Those buildings leased up pretty quickly,” he said.
Ongaro said office space left behind when Lucasfilm Ltd. moved to the Presidio in 2005 and Glassdoor exited Mill Valley for San Francisco last year has also been filled.
According to Newmark’s most recent report on the Marin office market, the vacancy rate was 18.5% at the end of June, down from 19.4% during the second quarter of 2021. By comparison, the San Francisco office market ended the second quarter of 2022 with a vacancy rate of 24.2%, according to the Coldwell Banker Richard Ellis Group. Marin had an office vacancy rate of 16.3% in the second quarter of 2020.
Blakeley said the fact that a number of very successful companies have started in Marin and then moved away is not necessarily a bad thing.
“We look at it in a very positive light,” he said. “You can start a billion-dollar publicly traded company in Marin County, not many regions can say that.”
Blakeley said more recent success stories such as Restoration Hardware in Corte Madera, Ultragenyx in Novato and BioMarin Pharmaceutical in San Rafael demonstrate that Marin retains its mojo for entrepreneurs.
“Obviously the conditions exist to start and grow a company here,” he said.
Originally published at Richard Halstead