Four years ago, tech company Salesforce paid $278 million for 14 acres worth of land in San Francisco’s Mission Bay, across the street from the University of California San Francisco campus.
When Salesforce’s CEO Marc Benioff announced the purchase of the land, the company planned on building headquarters that were nearly 2 million square feet, Bloomberg reporter. Despite the purchase, Salesforce decided to continue renting commercial real estate downtown, totaling 1.3 million square feet.
It is unclear why Benioff decided to stop his plan to create a campus that would “attract and retain talented, world-class employees” while creating “an innovative, dynamic environment,” but it could be due to the fact that the lot is near the site of a five-alarm fire, as the San Francisco Business Times explained. They could also simply be trying to make the most of their initial investment.
Commercial and residential real estate is extremely competitive right now in the Bay Area, so Salesforce’s decision to sell its waterfront lot may net a lot more than the original $278 million price tag. Tech businesses native to the area are struggling to find enough space to build headquarters as it is.
Greg MacKinnon, director of research for the Pension Real Estate Association explained to the news source how this opening may affect a market with an average capitalization rate of 4.7 percent.
“A lot of capital has been looking to get invested in the major gateway markets where prices have risen substantially and returns have narrowed,” he said. “San Francisco has been a very hot market, and it might be attractive for certain kinds of investors.”
The list of potential buyers include Silicon Valley companies that want to move further north, the Golden State Warriors basketball franchise that currently plays in Oakland, and entities based out of China looking to make an impact in the United States.
Companies that are interested in purchasing the 14-acre lot should expect to pay many up-front costs. However, utilizing lightly used quality office furniture can reduce the burden to the overall budget significantly. When the time comes to design the indoor office space, by utilizing lightly used quality office furniture, a facilities manager and interior designer can reduce the overall budget significantly.