Dropbox said Friday that it’s agreed to return over one quarter of its San Francisco headquarters to the landlord as the commercial real estate market continues to soften following the Covid pandemic.

In a filing, Dropbox said it agreed to surrender to its landlord 165,244 square feet of space and pay $79 million in termination fees. Under the amendment to its lease agreement, Dropbox will offload the space over time through the first quarter of 2025.

Since going remote during the pandemic three years ago, Dropbox has been trying to figure out what to do with much of the 736,000 square feet of space in Mission Bay it leased in 2017, in what was the largest office lease in the city’s history. The company subleased closed to 134,000 square feet of space last year to Vir Biotechnology, leaving it with just over 604,000 square feet.

In addition, Dropbox took a $175.2 million impairment on the office last year “as a result of adverse changes” in the market. That came after taking a $400 million hit in 2020.

San Francisco’s office vacancy rate stood at 30% in the third quarter, the highest level since at least 2007, according to city data.

“As we’ve noted in the past, we’ve taken steps to de-cost our real estate portfolio as a result of our transition to Virtual First, our operating model in which remote work is t