Salesforce said today it has agreed to become the sole tenant of a new highrise planned for 350 Mission St. in San Francisco, a $250 million development that will be the city's first new office tower in five years.
In the largest lease transaction in San Francisco this year, Salesforce said it would take the entire 400,000-square-foot building that developer Kilroy Realty Corp. plans to begin constructing early next year. Kilroy will seek entitlements to add another three stories to the 27-floor tower, which would bring the total Salesforce lease to 444,000 square feet. The three additional floors would also add $25 million to the project cost.
The deal, a 14-year lease, comes just eight weeks after Kilroy Realty Corp. purchased the site from GLL for $52 million. Kilroy had said prior to today's announcement that it was prepared to proceed speculatively, one of several major new San Francisco office buildings where construction might begin next year with or without a tenant in tow.
At the time of the site acquisition, Kilroy President and CEO John Kilroy said "it is rare that you get the opportunity to build from scratch a cutting-edge urban work environment in one of the nation’s hottest office markets at a cost-basis that makes it highly attractive relative to existing Class A properties."
Salesforce will become San Francisco's second largest user of office space over the next few years, after Wells Fargo. (NYSE: WFC) At the beginning of 2012, Salesforce (NYSE: CRM) leased 400,000 square feet at 50 Fremont, a 18-year agreement that included an option to take another 100,000 square feet, which it exercised this month. Salesforce also occupies space at One Market St., One California St., 600 Townsend St., 123 Mission St., and 333 Main St.
In March of this year Salesforce suspended plans to build a headquarters campus of up to 2 million square feet on 14 acres in Mission Bay, instead choosing to focus its expansion in the downtown core.
The Mission Street building sits across the street from the future Transbay Tower and is being designed by Craig Hartman of Skidmore Owings & Merrill. It will feature floor-to-ceiling windows, column-free floor plates offering open-office, high-ceiling layouts, and energy-efficient operating systems.
The building entrance on Mission Street will include a 50-foot, open air entry lobby featuring a 75-by-40-foot electronic media display wall. The new building will feature a side-core configuration, an all-concrete structure and an under-floor air distribution system, which Kilroy believes will attract the knowledge-based, collaborative companies drawn to flexible and open interiors. In-building amenities include electric vehicle charging stations, a fitness center with showers and lockers, and a first-class bicycle and storage center.
Christopher Roeder, David Churton, and Ted Davies of Jones Lang LaSalle represented the property owner. Dan Harvey of Cushman & Wakefield represented Salesforce. Tony Natsis and Mike McFadden of Allen Matkins were the attorneys representing Kilroy Realty Corp.