Salesforce, San Francisco’s largest private employer and occupant of its tallest building, is trimming workers and has vowed to ditch real estate holdings. The question is: How many?
The management software firm, based in the city, announced it would lay off 10 percent of its workforce and eliminate office leases, the San Francisco Business Times reported.
What it didn’t say was where it would shrink its real estate footprint. An obvious place is close to home, where the downtown office vacancy is 25 percent.
Salesforce said in a regulatory filing this week it expects to pay between $450 million to $650 million in charges tied to “select real estate exits and office space reductions within certain markets.”
In 2021, the company hired a new head of real estate, former Stripe executive Relina Bulchandani, to help consolidate leases. Amy Weaver, chief financial officer for the company, told investors that Salesforce would continue to evaluate its real estate footprint and make cuts where necessary.
“When leases come up, we don’t renew when we consolidate into areas,” Weaver said on an earnings call late last year. “It’s something that we are continuing to benefit from.”
As of January 2022, the company had about 1.9 million square feet of leased and owned property in San Francisco, according to its annual report. It also had about 705,000 square feet in San Francisco that was sublet at the time and 212,000 square feet available for sublease.
Salesforce executives acknowledged that some of those offices may have to go.
“We’re never going back to how it was — everyone knows that,” CEO Marc Benioff said during a third-quarter call, in reference to the shift to remote work.
The company now leases 875,000 square feet at its headquarters in Salesforce Tower at 415 Mission Street from Boston Properties. The lease expires in 2031, but it doesn’t appear it intends to shed space inside the signature tower.
In July, Salesforce put more than 400,000 square feet of office space, about half of its 43-story Salesforce West tower at 50 Fremont Street in the Financial District, up for lease. That marked its third office cut since the pandemic.
The cloud-based software firm bought 50 Fremont in 2015 for $638 million, before Salesforce Tower was built across the street. It employs 10,000 workers in the city, who have been allowed to permanently work from home part of the week.
In March 2021, it subleased 339,000 square feet, or half of the 30-story Salesforce East tower at 350 Mission Street owned by Kilroy Realty to Yelp and Sephora. At the same time, it canceled its 325,000-square-foot lease at the unbuilt Parcel F tower.
Last February, Slack, the messaging company now owned by Salesforce, listed 200,000 square feet for sublease at 45 Fremont, according to the the Business Times. At the same time, Salesforce leased a 75-acre ranch near Santa Cruz for onboarding, training and hobnobbing.
Slack leases 230,000 square feet at Foundry IV at 500 Howard Street through 2031. Heitman is the landlord.
In March 2020, Salesforce bought 450 Mission Street, a five-story office building across the street from Salesforce Tower, for $145 million. It still owns the property, and the company doesn’t occupy space there, according to the Business Times.
As of 2019, Salesforce had office towers in London, New York, Indianapolis, Atlanta, Tokyo, Dublin, Sydney and Chicago.
In early November, Salesforce confirmed that it had laid off hundreds of workers, with more layoffs in the works.
— Dana Bartholomew
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