2) startups are always growing or shrinking. no point putting so much significant capital unless it is an established in for a long haul at a location where talent is surplus.
3) if you indeed have that much capital, you can pretty much dictate what you want and get some tax benefits (amazon, second HQ) or work with a city build a new building suitable for your long-term needs (apple).
4) not much inventory that meets your needs in SF market because the property prices are always going up.
5) the leasing company actually has limited leverage. finding another tenant esp. the size of dropbox is not easy. you can bin pack other tenants but you lose lot of money until all new tenants move in.
This can be true even at the SMB level. My employer sees only a couple of million in revenue yearly, we lease our warehouse/office space and we have more or less free reign to make any non-structural changes. If we decide to clear out a corner of the warehouse to put in more office space, we can (and we have). We just have to pay for the materials and labor. We've actually had our lease renewed on better terms over the years for being good tenants.
Interestingly that's exactly the case in Germany. Home ownership there is one of the lowest in the world so that tenants stay in one place for longer. It's normal for tenants to change apartments as they like during the tenancy. Landlords don't care as long as it's in a good state at the end of the tenancy.
Well yeah, but you can still pay someone else to do it, even if you own the property.
Dropbox is a decade old, at this point...
If you think about it - do you want to invest in 'real estate' or your 'high growth business'. And buildings are very expensive so it would be a huge amount of cash. And cash-flow is always an issue in a growth company.
Of course, it would mostly be financed with a mortgage, but then you get into a weird balance sheet situation - massive asset, and if the company folds, or wants to move, what do you do with it? It's hard to just 'flip' a building. Do they want to 'manage a property' in that 'old area they used to be in'?
Aside from the operational/cash flow issues, it wonks up the companies metrics as well. This 'big ball of assets' can distort all the reporting metrics.
Companies really don't want to 'own' anything unless it's a totally core thing to their experience.
Long-term leases can be negotiated with future pricing in mind.
Think Hotels: Four Seasons and Fairmont don't even own most of their hotels! They get big, long-term funds (think Saudi sovereign funds) to buy the real estate, and then sing a super long term lease-deals and then the hotel is really just an 'operating company' with those physical asset off the balance sheet.
'Owning property' is usually a fundamentally different business than whatever is going on inside the buildings.
If you are a 'growth' company, your cash is almost always better used in your business.
If you are a 'massive fund' (or a bank) that needs to park gazillions of dollars around the world long-term and you want fairly low risk but some kind of return - you buy property.
Is one way to look at it.
Some companies own their own real estate, but that involves hiring a number of people dedicated to managing it. It might be more efficient to outsource that to a landlord. There are probably also tax implications to one or the other depending on the company's situation.
Target is a good example of this. It's a $32B company that owns $24B of real estate.
When they lease a space, it's a contract, so they could put in favorable language for renewing the lease. Guinness brewery famously has a 9,000 year lease paying only £45 annually.
https://medium.com/halting-problem/zyngas-offices-now-worth-...
If they grow to be big enough, then they can move out at build their own campus. Equalises the leverage at that point.
Also, the lease term will be for more than a few years (IMO 5-10) and that’s good enough time to figure out growing plans.