By Meghan Hall
Salesforce has committed to long-term growth in San Francisco by signing a 325,000 square foot lease of office space for a project called Parcel F, located at 546 Howard St. in San Francisco, according to a statement from the company. Parcel F, which has not even been approved, is slated to be one of several major skyscrapers adding to San Francisco’s skyline as part of the city’s Transbay District. When completed, Parcel F will be the fourth tallest in the city of San Francisco.
Dan Harvey of CBRE represented Salesforce while Hines represented the Parcel F Ownership Group, which also includes Urban Pacific Development and Broad Street Principal Investments.
“We are very excited to expand upon our great relationship with Salesforce and Pelli Clarke Pelli in developing Parcel F. We are very pleased with Salesforce’s long-term commitment to San Francisco, and we are eager to provide them with the highest level of service,” said Hines Senior Managing Director Cam Falconer in a statement.
Revised plans for Parcel F, submitted in January 2018, proposed a 61-story, 800-foot tall tower. According to Houston-based international real estate firm Hines, who is part of the partnership spearheading the development, the tower will be the last super tall building in San Francisco for the foreseeable future, and the last project that can directly connect to the Salesforce Transit Center Rooftop Park. In addition to the 325,000 square feet of office, plans include 165 condominium units, 79,000 square feet amenity space and a 190-key hotel. 9,000 square feet of retail is also included in the plans, making the tower the only mixed-use project in the city to incorporate residential, office, hotel and retail uses into a single tower.
The 31st floor, the last floor of Salesforce leased floor, will be called the Ohana floor, according to the Salesforce website. The floor will contain a flexible hospitality space, which will be open on weeknights and weekends when available to nonprofits and foundations.
Salesforce’s employees are expected to begin occupying the building in 2023. The tower is located in between First, Second, Howard and Natoma Streets and is steps away from Salesforce Tower, where the technology company began occupying 881,762 square feet of space on 36 floors in January 2018. The company is currently the city’s largest employer, with over 8,000 employees in San Francisco, and the newest lease is indication of its intent continue to grow the company nearby.
Salesforce has leased all of the Parcel F’s Class A office space, adding to the 2.5 million square feet of office space spread throughout five separate Transbay Transit Center buildings. The lease, signed before the project has secured final approval, highlights the competitive nature of San Francisco’s commercial real estate market, where growing companies are forced to think far in advance if they want to secure spaces with higher square footage. Numerous other tech companies such as Google and LinkedIn are growing in the City. Google leased up all of Salesforce’s former space at One Market at the beginning of November 2018.
According to Cushman & Wakefield’s 2018 third quarter office report for San Francisco, asking rents are at all-time highs and 100 percent of construction completions – totaling 583,000 square feet — were completely pre-leased, as Adobe snapped up 100 Hooper St. and Stripe moved into 510 Townsend St. 2.8 million square feet is currently under construction, but no deliveries are slated until 2019. 751,000 square feet of space at Park Tower in the South Financial District has been pre-leased by Facebook.
Cushman & Wakefield speculates that the potential passage of the Central SoMa plan, expected in the coming weeks, could help alleviate the office space crunch with up-zoning in the area to create greater density for transit-oriented office developments. The report states that many developers are holding out until the passage of the plan to propose new developments. However, the big block space market will remain tight with very little new construction in 2020.