San Francisco City Downtown, California. (Photo: Lynn Yeh/Shutterstock)
Salesforce Leaves Entire SF Office Building As Bay Area Office Vacancy Crisis Worsens
Company is currently looking to sublease over 700,000 square feet of office space
By Evan Symon, April 12, 2023 9:19 pm
Salesforce, one of the largest companies in the Bay Area, continued to vacate San Francisco this week by completely moving out of the Salesforce East tower, with all of their formerly occupied floors going to lease.
Founded in San Francisco in 1999, the cloud-based software company quickly became one of the tech darlings of the Bay area, with its sales, customer service, and e-commerce products boosted to having an IPO in 2004 and passing the $1 billion revenues mark in 2009 – during the height of the Great Recession. Through the 2010’s, Salesforce continued their dominance, including Salesforce Tower being the name behind the tallest building in San Francisco. They grew so much that they took over another skyscraper, 350 Market, with the name changing to Salesforce East.
However, the COVID-19 pandemic, high rent costs, multiple changes in leadership, and a growing work-form-home force took its toll on the company in the 2020s. Salesforce began large cuts in 2022, with the company largely pulling out of Salesforce Tower, subleasing half of their former headquarters in July 2022. While a growing work-form-home force had the company leave more and more office space, many employee cuts were also announced. Multiple rounds of firings occurred in late 2022 and early 2023, including a large 10% across the board cut occurring in January as a result of too many people coming on board during a jump in sales during the pandemic.
“As one ‘Ohana, over the last 23 years, Salesforce has built the #1 CRM that drives incredible customer success across every line of business for every industry around the world,” CEO Marc Benioff wrote in January. “We have never been more mission-critical to our customers. We have an unparalleled ecosystem, with thousands of partners and millions of Trailblazers building their companies on our platform.”
“However, the environment remains challenging and our customers are taking a more measured approach to their purchasing decisions. With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks. I’ve been thinking a lot about how we came to this moment. As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”
This led to the announcement that Salesforce would be completely leaving Salesforce East, the building that bears its name. All 104,051 square feet currently leased is now up for sublease. With the announcement, Salesforce currently has 709,000 square feet of office space for sublease currently available in San Francisco, leading Airbnb by over 200,000 square feet due to Salesforce having space available in two of San Francisco’s largest office buildings.
“This is not great news for many people,” Michelle Duggan, a building occupancy researcher, told the Globe on Wednesday. “The city is screwed because this is just more empty office space with no one coming in and supporting downtown businesses. Office vacancy is still around 30%, which is really bad, especially because it was under 1% before the pandemic. The city is not doing anything, despite trying, to keep these businesses downtown either. The obvious answer is major tax cuts to entice them downtown again, as any lost revenue there would come back through spending, but they aren’t doing the smart thing. They are looking into converting space for housing, but that is still years away from being viable.”
“But it’s also bad for tech companies like Salesforce. They haven’t figured out the right work-form-home/office balance just yet, and many are still shedding employees because of costs. Salesforce abandoning a building which they named after it is a big red flag that things are wrong in San Francisco and the tech world right now. All this empty space is just going to continue hurting everyone.”
More large vacancies are expected to be announced soon as more leases are getting close to end-of-lease dates.
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December 30, 2022 -
Nothing wrong in tech, all wrong in SF.
Companies will be leaving SF knowing they will be hit with that ridiculous 5 million reparations plan coupled with high crime and homelessness. SF is the utopia of liberal logic
“Let’s turn it all into free/low rent, green, renewable, sustainable housing, including student housing!” seems to be SF leftists go to idea. And if you follow the money (which pays for said housing) long enough, you find the hardworking, already over tax burdened productive members of the community are the ones who pay. Which causes more to leave, which causes more empty office space, which leads to urban decay. I wouldn’t mind the city dying and crumbling to dust, honestly, but my suspicion is that the refugees just go on to new nests, which they begin fouling with their insane leftist voting.
It sucks knowing that obscenely ugly building is empty. Tear it down.
Just think that in less than ten years the left coast, once a prime tourist destination, has become a mecca for the homeless, drug dealers, human traffickers and welfare recipients. I suggest that you turn downtown Seattle, Portland, San Francisco, Los Angeles and yes San Diego over to them. Put up a fense around and let hollyweird make more Escape movies.
This happens after every building boom in downtown. Heck, everywhere else, too. Developers and would-be entrepreneurs build, build, build until there’s too much new of whatever they built, then the area goes into a recession until a miracle happens and the new buildings fill up. The last miracle was SF’s subsidy of tech moving up from the Peninsula. No one knows when the next one will be.
And, yes, the Salesforce Tower is an ugly one-penis salute to SF that will stand as a monument to Benioff’s prideful mismanagement. The Greeks called it hubris, overreaching oneself until the gods smack you down.
why not turn over those empty office space to the homeless.
Oh, they will …
This is disgusting! The Republicans need to take over SF and let them recreate the city in their ways. Everything would be perfect! I blame the liberals aka Biden supporters! We need TRUMP! MAGA
TRUMP??? HAAAAAAAAAAAAAAAHEHHEEEEEEEHEHEHEHEHEHHEHEHEHEHHEHEHEHEHHAHHAHHAHAHAHAHAHHAHAHHAHAAHHAHHAHAHHEHEHHEHEHHEHEHEHEHEHHEHEHEHEHEHAHHAAHHAAHAHHAAHAHHAHHAAHHAHHAHHAHAHAAAAAgaspHHEHEEEEEEHEHEHEHEHEHEHEHEHHAHAHAHAAHAA!
Good grief.