Square Feet: Someday Worth Billions, but Now, They Need a Desk

SAN FRANCISCO — In the 20th-century workplace, Duncan Logan might be considered an abusive landlord. He rents working spaces without doors or walls between tenants. Instead, his renters work at long tables, and sometimes those tables are shared with other companies.

Yearn for privacy? “Headphones are the new cubicle,” he said.

In today’s tech world, though, if Mr. Logan did have a door it might be knocked down by clamoring start-ups. What RocketSpace, the office rental company he started in San Francisco in a building on its last legs in late 2010, does provide is lots of high-speed Internet access, proximity to well-regarded young companies, amenities like free beer and occasional chats with the likes of Steven A. Ballmer of Microsoft, Dick Costolo of Twitter and the venture capitalist Vinod Khosla.

That, it seems, more than makes up for the lack of privacy. Besides, in an era of oversharing on social media sites, who needs privacy when you can have collaboration?

“I was here until 10:30 the other night, and so was the guy at that company, and them over there,” said Michael Perry, indicating two tables close to his own at RocketSpace. His four-person start-up, Kit, is trying to use online data so brands can find their most vocal supporters on places like Facebook. “When I was working alone, I thought I had a billion-dollar idea,” he said. “Here, everybody thinks they have a billion-dollar idea, and they’re hammering away. That’s inspiring.”

Rents are up and vacancies scarce in San Francisco as the tech boom has traveled north of Silicon Valley. And novel, flexible office plans have come with it.

According to the real estate service CBRE, technology now accounts for 75 percent of new office demand in San Francisco, compared with the historical norm of perhaps 30 percent. The city seems like a place where almost any space could rent. Some start-ups are setting up in the Tenderloin district, long considered one of the city’s worst neighborhoods.

Even in the hot San Francisco market, however, RocketSpace appears to be making a 20 percent premium to current office rental prices, based on its 580 desks, leased by some 130 companies. Mr. Logan, who leases space inside two buildings near the old Pacific Stock Exchange, charges $700 to $800 a month for a “desk,” or table space.

Unlike temporary offices like Sandbox Suites or WeWork, which rent desk space to freelancers and others, or the so-called incubator spaces that take equity for their start-ups getting off the ground, RocketSpace expects companies to increase staff under its roof, and to pay cash. Once a start-up gets to about 30 people, it is time to move out.

Mr. Logan, 41, works hard at making sure renters have credibility by checking their backers and work histories. He cultivates relationships with venture capitalists and has researchers looking for the next hot thing. There are lots of free Jolly Rancher candies and boxes of coconut water, but renting here takes money, well-known backers and a personal track record at hot firms. “From the start, we’ve vetted which companies would be here,” he said.

If he reaches his goal of filling a thousand desks by the end of the year, Mr. Logan should get more than double the typical per-square-foot rate associated with fancier offices. His costs, besides the tables, Wi-Fi and free beer, include the odd translucent panel between spaces, padded chairs with backs so high and straight that they can be pushed together to enclose a meeting of four people, and an automatic espresso maker in the common kitchen.

Companies that have passed through RocketSpace, either as local start-ups or initial satellite offices, include such tech darlings as Zappos, Uber, Spotify and Kabam, an online gaming company.

“It was amazing — lots of tables, so you can’t tell where one company began or ended, a receptionist who didn’t know who you were, people talking in whispers because everyone is working so closely together,” said Steve Swasey, the head of communications at Kabam. “It’s just how our office looks now, even the wires hanging from the ceiling.”