Salesforce, the largest employer in San Francisco, is shedding 350,000 square feet of office space by putting more than a third of its 43-story tower in the Financial District up for lease.
The tech giant is leasing 40 percent of its Salesforce West building at 50 Fremont St., the San Francisco Chronicle reported, citing data from CoStar. It marks its third office cut since the pandemic.
The reduction points to falling demand for office workspaces in the era of remote work. The city’s office vacancy rate has quadrupled to more than 21 percent since 2020.
The Salesforce listing ranks among the biggest office craters in the city, with room for about 1,750 workers. The company said it will keep the building and reoccupy the space as needed.
“Salesforce offices are an important part of our culture, and how we use them has evolved. We are subleasing floors in Salesforce West to make the most efficient use of our real estate footprint,” the company said in a statement.
The company bought 50 Fremont St. 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.
Last year, it subleased space at the Salesforce East tower at 350 Mission St. to Yelp and Sephora, which shows demand for centrally located, high-quality offices. At the same time, it canceled its 325,000-square-foot lease at the unbuilt Parcel F tower.
Slack, the messaging company now owned by Salesforce, listed 200,000 square feet for sublease at nearby 45 Fremont, the San Francisco Business Times reported in February.
Salesforce continues to grow in other cities, with plans for Salesforce Towers in Chicago, Dublin, Sydney and Tokyo over the next two years. The tech industry is now expanding outside of the Bay Area, where real estate costs and salaries are lower.
The company said it is hiring more selectively, as challenges like inflation and fear of a recession dampen the economic outlook.
Major tech firms have downsized or shuttered San Francisco offices during the pandemic, including Coinbase, Pinterest, Block, Taskrabbit and PayPal.
Of the 14 firms and companies that shrunk or disclosed plans this year to shrink their office footprints in the Bay Area by at least 50,000 square feet, 10 are looking to do so in San Francisco.
San Francisco-based companies, or those with offices in the city, have vacated or plan to exit almost 1.8 million square feet of space, according to The Real Deal’s research.
That represents almost three-quarters of about 2.5 million square feet of property across the Bay Area that businesses have given up or announced plans this year to relinquish.
[San Francisco Chronicle] – Dana Bartholomew
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