Salesforce, the largest employer in San Francisco, and an anchor tenant in the 1.4 million square-foot Salesforce Tower, the tallest building west of the Mississippi – owned by Boston Properties, the largest office landlord in San Francisco – announced today in a blogpost, that it would switch to a hybrid “work-from-anywhere” model going forward.
After the Pandemic, employees would fall into three categories. About 65% of the workforce would be “flex”; they’ll be “in the office 1-3 days per week for team collaboration, customer meetings, and presentations.” The rest of the time, they’d work from home. Another group would be “fully remote,” working from anywhere. And the “smallest population of our workforce” would be “office based,” and work 4-5 days per week in an office location “if they’re in roles that require it.”
“We’re not going back to the way things were,” president and chief people officer Brent Hyder told the Wall Street Journal. “I don’t believe that we’ll keep every space in every city that we’re in, including San Francisco.”
A lot less office space would be needed to accommodate these people. The layout of the offices that remain will be changed dramatically into “community hubs to accommodate a more hybrid workstyle. Gone are the days of a sea of desks,” Hyder wrote. He already moved out of San Francisco to Southern California last year.
In the blogpost, he wrote: “An immersive workspace is no longer limited to a desk in our Towers; the 9-to-5 workday is dead; and the employee experience is about more than ping-pong tables and snacks.”
So this was the latest announcement to knock the wind out of the San Francisco office market, and more broadly, out of San Francisco’s economy.
Vacant space on the market has already exploded to an all-time high, blowing by the prior records set during the Financial Crisis and the Dotcom Bust, to 13.9 million square feet, according to Cushman & Wakefield. Sublease space – companies putting their now unneeded office space on the market – accounted for over half of the total vacant office space and has become a pandemic in its own right.