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How Salesforce Evolves Its Real Estate Strategy

Tech Firm Says New York Tower Has Best Office Utilization Rate Across Its Global Property
Salesforce Tower in New York includes panoramic views of Manhattan. (Andria Cheng/CoStar)
Salesforce Tower in New York includes panoramic views of Manhattan. (Andria Cheng/CoStar)
CoStar News
May 30, 2024 | 7:17 P.M.

At Salesforce Tower in Chicago, where the eponymous business software giant moved late last year, there’s a new library-like area offering quiet spaces with more natural light. At its Dublin office tower in Ireland, a site that also opened in 2023, the company added more desks for what it calls focus work.

More than four years since the pandemic upended office markets, partly because of hybrid work schedules, large employers are fine-tuning their workspace strategy. For Salesforce, a company struggling with slower sales and a one-day stock drop of about 20% on Thursday, this means finding a balance between spaces designed for employees to brainstorm and collaborate, and areas that facilitate concentration on the hard work at hand.

Salesforce Tower in New York, where the office use rate is the highest, stands out as the company's model as it manages about 72,000 employees worldwide across 98 offices in 86 cities, including nine namesake towers.

“When we came out of the pandemic, everyone was like, ‘You need a lot of collaboration space,” Relina Bulchandani, Salesforce’s head of real estate, said in an interview. “What we have realized is … people want to come in to collaborate, but … people want to come in and do some focus work also, especially in some of the cities. They want to just get out of the apartment and actually come in and work.”

Salesforce Tower's Ohana Floor in New York features a barista bar. (Andria Cheng/CoStar)

In Dublin, Salesforce has increased the office space density for some sales teams, Bulchandani said.

“A one-size-fits-all is not the right approach,” she added. “Our thinking is: Have a diversity of spaces.”

That meant adding areas geared toward focus in Dublin, a location designed with 70% more collaboration space than Salesforce’s other offices.

Touch of Technology

Salesforce also wants to “re-imagine the workplace” and improve employees' office experience through the use of artificial intelligence, Bulchandani said, adding the technology isn’t just about helping people find where they can sit. For example, the company wants to use AI to put employees visiting a city in touch with team members they might want to meet. The tool can assist in organizing a corporate event, whether it be in Atlanta or at Salesforce's San Francisco headquarters, tailored to a gathering's specific purpose and nature.

“It's like taking our data and really being intentional about connection,” she said. “We're also thinking about … what that team is trying to achieve. It's not just space as a commodity.”

Bulchandani, who joined Salesforce in 2022 after professional stints that included serving as a Google real estate executive, said she wants to “unite people under one roof” across various cities to establish a “center of gravity.”

Still, Salesforce has reduced the number of its employees since its 2022 peak of nearly 80,000. The company has been cutting costs and shrinking its real estate, as the pandemic has slowed client demand amid worries about an uncertain economy. Salesforce said in January 2023 it was slashing its global workforce by 10%. The firm has reduced space in San Francisco by 45% in the past year.

On Wednesday, Salesforce cut its outlook for fiscal year 2025 subscription and support revenue as well as its operating margin. Expected sales growth this quarter will be the slowest in its history, Bloomberg reported.

A signature element of Salesforce's Ohana Floors is what its head of real estate described as "living columns." (Andria Cheng/CoStar)

At the Chicago tower at 333 W. Wolf Point Plaza, built during the pandemic and where CoStar data shows Salesforce leased nearly 440,000 square feet in 2018, the company has listed for sublease at least 115,000 square feet.

Salesforce is “rebalancing” its real estate to “better position ourselves for the future,” a spokesperson told CoStar News, adding that changes it made to its portfolio have helped it “gain efficiencies and maintain [its] vibrant office experience.”

Bulchandani said she wants to make sure, after doing “a lot of acquisitions,” that Salesforce is properly integrating teams after inheriting new real estate.

“There are cities where we could have multiple offices where we bring them into one office,” she said.

Besides the Chicago, New York and Dublin buildings, its namesake towers are located in Atlanta, Indianapolis, London, San Francisco, Tokyo and Sydney, which is expected to open this fall. A large portion of the company's office space is leased, with the exception of some real estate it owns in San Francisco, the spokesperson said.

Different from other offices, all of its nine namesake towers feature what Salesforce dubs "Ohana Floors," or amenities and event spaces at the top of each building that contain what Bulchandani described as “living columns” decked with live plants and flowers, communal tables, plus other furniture made of natural wood, among other sustainable materials.

Another element of Salesforce Tower in New York is the company's character mascots. (Andria Cheng/CoStar)

The spaces aren’t just for Salesforce employees and their guests. The company regularly hosts events for clients and partners and opens the floors free of charge for use by nonprofits as well. "Ohana" means "family" in Hawaiian.

Salesforce Chief Executive Marc Benioff, said to be enamored with Hawaii where he's reportedly bought hundreds of acres, is key to the design of the Ohana Floors. For instance, Benioff, according to interior design firm Wiseman Group that did work for Salesforce Tower in San Francisco, "imagined a space where employees, clients, and others could gather and connect with each other while enjoying San Francisco's world-class views."

Besides featuring natural materials, vibrant colors and organic shapes, the spaces also house curvilinear sofas and expansive dining tables that "encourage conversation and camaraderie," Wiseman Group said.

The Ohana Floor in San Francisco was once open to the public for tours, but those have not resumed since the pandemic started, according to the spokesperson.

Bulchandani also wants to use the spaces to host more events the company previously held at off-site hotels.

Wide Views, Rare Orchids

On a recent Monday afternoon at the Ohana space on the 41st floor of Salesforce Tower at 1095 Avenue of the Americas in New York, some employees gathered for a break and chatted around a barista bar. Others spread about alone doing work on their laptops across the floor featuring a 360-degree panoramic view of the city.

Meanwhile, some employees were showing off the space — with 15,000 plants, including over 350 rare orchids — to their family and other guests.

“Employees really feel this environment and space help them with work focus and productivity,” Bulchandani said. “As we design, build, operate any of our spaces, you'll see the same elements.”

Salesforce isn't alone. Landlords have said employers of all kinds seek offices with better light and what's called biophilic design that integrates their space with a more natural environment. They believe it helps attract talent and will bring workers back to the office. Properties with appealing amenity spaces have commanded top-dollar rent, brokerage studies have shown.

Salesforce Tower's amenities floor in New York features a mixture of lounge and collaboration space. (Andria Cheng/CoStar)

The Manhattan skyscraper across from Bryant Park, opened in 2016, is Salesforce's first namesake tower in the United States and second globally after the London building debuted in 2014. It’s also Salesforce’s busiest location with an 86% office utilization rate between Tuesday and Thursday, Bulchandani said. There are about 1,600 employees.

That's in contrast to the 59% average daily attendance rate among Manhattan's tech sector office occupiers in May, according to a survey released Wednesday by the Partnership for New York City, which surveyed major employers in the city.

“There's a lot of co-location, co-creation and collaboration happening in this space. It's pretty activated. … We have so many folks coming in. … We can really design and prototype different things here and then take it to other towers,” she said.

The Ohana Floor also features a board room and town hall meeting spaces, while sliding glass doors are used to divide event areas when necessary to signal “transparency,” Bulchandani said. That's different from opaque glazed doors often used by other companies, she added.

‘Villages’ and ‘Neighborhoods’

Like other Salesforce towers, three of the seven floors that Salesforce leases in New York are connected with internal staircases to create what the company calls “villages.” There are also desks and conference rooms grouped together for teams known as "neighborhoods." Like other Salesforce towers, the space, spanning about 240,000 square feet, doesn’t have executive offices.

The company is “all about being open to all and being welcoming,” Bulchandani said. “It's important to kind of see each other and connect with each other when you’ve made the effort to come in.”

Salesforce’s real estate strategy is also a “central business district play” that she said supports the local community with employees going out to pick up food, for instance.

“We have this downtown approach — close to public transportation, and really supporting the city,” as opposed to other companies that are located in the suburbs, she said.

Salesforce has a mixture of office-attendance policies and has had hybrid work schedules, even before the pandemic, she said. For instance, its office-flexible teams that are assigned to a location work in person three days a week, including meeting with customers or attending events. Product and engineering teams are in person 10 days per quarter. Customer-facing teams are in person with each other or their customers four days per week. Some employees are allowed to work remotely without having any office assigned.

As to why New York has the company’s most utilized tower, Bulchandani, who lived in the city for 16 years before moving to Silicon Valley for Google and eventually to San Francisco for Salesforce, said there are advantages such as a “great transportation system.”

Like other employers, Bulchandani said she’s seeking ways to up the office utilization rate on Mondays and Fridays. For instance, Salesforce hosts in-person onboarding events on Mondays while creating time for volunteering events on Friday afternoons after employees come in.

“We want to see more of that, like all other corporate real estate leaders right now,” she said.

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