Salesforce to cut even more San Francisco real estate by subleasing part of 30-story tower

Salesforce is offering a portion of its San Francisco offices on Mission St. 350 for sublet after the cancellation of a separate contract on a nearby Transbay project, two of the biggest tech home reductions during the pandemic.

The announcements come as business is booming for Salesforce. Annual sales rose 24% to over $ 21.2 billion in the past fiscal year. However, the company has room for a permanent schedule that most employees should be absent from one to four days a week.

“We continue to evaluate our global real estate strategy in order to adapt it to our business needs. As our employees plan to be more flexible when they return to the office, we are reducing our footprint, ”Salesforce said in a statement to The Chronicle.

About half of the 450,000-square-foot Mission St. Tower with the Salesforce East brand is being offered for sublet, according to someone familiar with the property. Before the pandemic, around 1,000 workers could have fit in that much space, but many companies plan to clear desks in the future. Salesforce has 10,000 employees in San Francisco.

Salesforce also announced a 2018 lease for 325,000 square feet of office space at 542-550 Howard Street, a project that has yet to be approved. It was planned to have 1,500 workers in the tower.

The tech giant rents 881,000 square feet of the Salesforce Tower, the tallest building in the city, and owns 817,000 square feet of buildings at 50 Fremont St. and 440-450 Mission St. There are no plans to downsize offices in these buildings that Salesforce has with other tenants shares, said the company.

Salesforce is the anchor of the Transbay district, a symbol of the tech boom of the past decade. Most of the energy on the previously busy streets has disappeared in the past 12 months as the refuge celebrates its one year anniversary next week and unneeded offices remain closed.

In the absence of company cafeterias, Salesforce employees were the largest group of customers for local restaurants and cafes before the pandemic. The absence of workers was devastating. Sales taxes in downtown San Francisco were down more than 70% year over year in the second quarter of 2020.

Now business leaders see an even more dispersed economy across the tech industry.

“I think we can all agree that this pandemic has forever changed our world and how we work, live and educate ourselves from anywhere,” said Salesforce CEO Marc Benioff at an earnings call last month. “Salesforce is accelerating so quickly because we’re already in this world where people work from anywhere.”

Salesforce has benefited from increased consumer demand while working remotely with its cloud computing marketing products. The 54,000-strong company is hiring 12,000 additional employees worldwide this year, including some in San Francisco.

Mark Zuckerberg, CEO of Facebook, said last year that remote working “gives us access to pools of talent outside of traditional tech hubs in big cities – and that this should help spread economic opportunity across the country and around the world, and us at the same time helping build a more diverse business. ”

Facebook rents all of the office space in Transbays Park Tower and 181 Fremont and has not downsized any of its local properties.

Salesforce was a leader in local philanthropy, providing $ 10,000 grants to 180 small businesses in San Francisco late last year. The company said its efforts will continue.

“As the largest private employer in San Francisco, we’re committed to growing and giving back to the community for years to come,” said Salesforce.

Kilroy Realty, one of the city’s largest office rental companies, owns 350 Mission St. Kilroy and is selling another property it leases from Dropbox for $ 1.08 billion, despite the fact that Dropbox has switched to remote working and sublet plans itself. Office tenants are required to pay rent even when most of the buildings have been closed by municipal health contracts. If a sub-tenant cannot be found, tenants are obliged to pay for rented space, even if it is not used.

According to Cushman & Wakefield, sublet space has accumulated in San Francisco, accounting for more than half of the vacancy rate of around 18.2% at the end of February. At the beginning of the placement, the vacancy rate was around 6.7%.

Roland Li is a contributor to the San Francisco Chronicle. Email: [email protected] Twitter: @rolandlisf