Why Salesforce's Lease Closed Quickly
Salesforce announced its monster deal for 714k SF at Transbay Tower this morning—S.F.'s biggest office lease ever—with a huge press event at 50 Fremont, overlooking the pit of its future home it'll rename Salesforce Tower. We got exclusive, behind-the-deal deets on the deal we first broke a month ago.
Salesforce will largely take the bottom half of the 61-story tower, floors 1 and 3 to 30, and the top floor (who gets to be the meat in the Salesforce sandwich?), under construction by Boston Properties and Hines at First and Mission. (A Salesforce flag hung on the tip of a crane this morning for all commuters to see.) We caught up with Hines senior managing director Paul Paradis at the event, who tells us this lease means tech companies are no longer against going vertical. The jaw-dropping top floor of the 1,070-foot skyscraper will be used as an executive meeting space, granting C-levels the tallest view from a building West of the Mississippi.
House Democratic Leader Nancy Pelosi jokes that Salesforce will not only be in "the cloud" physically, but technologically as well. The software giant expects to hire more than 1,000 Bay Area employees this year. She calls the Transbay project the ultimate public-private partnership. Paul also tells us a marketing center will open in a couple weeks on the 20th floor at 50 Fremont—five floors down from where we were standing—to help lease out about 700k SF of office space left in the tower.
Above, Mayor Ed Lee laughs that the Salesforce Tower model (unveiled this morning) is taller than him. After the event, we got BP's Allen Matkins lawyer Tony Natsis on the phone to explain how this deal happened so quickly. Once both sides got to the table, the dotted line was signed in five weeks (in a normal deal that can take eight months, he said). Due to confidentiality agreements, it remained a well-kept secret, he says (almost as good at Kanye's proposal at AT&T Park?). But brokers in the market knew something was up because if they asked to deal with that particular chunk of space, they weren't allowed to get a response from ownership.
The speed was even more impressive since the deal involved an interdisciplinary team on the construction and architecture sides that had to think about signage on the building and naming it. (You want people to know who's working in there when King Kong starts climbing up the side. No press is bad press.) Both sides of the table wanted to make sure it would be a super iconic building (rendered above) for an iconic tenant; Tony equates it to the Sears Tower. Considering it's taking a year to dig, a year to build a skeleton, and a year to finish it off, Salesforce needed to look far out to figure out headcount to fit the right amount of people in the building. It's a miracle everything got sorted out so fast, he says.
As a comparison, Tony (here with daughter Marialexa) says the mammoth-sized deal he worked on to bring CAA to the 2000 Avenue of the Stars in Century City—also new construction—took a year. Another factor behind the speed: Pressure was coming from the highest levels, he says (Salesforce and Boston Properties' chairmen). Other incoming towers like 222 2nd and 181 Fremont weren't options; Salesforce wanted their name on the most famous building in the Western region and they had to pick up the pace because other potential lead tenants were standing in line. To consolidate in the city, this is the place to be, he says. Salesforce is also leasing Kilroy's 350 Mission rising across the street. Cushman reps Salesforce.