Salesforce Tower in San Francisco
Burlington-based e-commerce company Demandware’s future parent, San Francisco-based Salesforce.com, has a penchant for plastering its name on some of the tallest buildings on the skyline as it expands its workforce in global gateway cities from San Francisco to London.
Salesforce’s $2.8 billion acquisition of Demandware, announced this week, could trigger a major lease transaction at a downtown Boston trophy property or kick-start construction of a landmark skyscraper designed to recruit talented techies.
In San Francisco, New York and Indianapolis, Salesforce signed a series of naming rights deals as it opened new regional headquarters in recent years. Its real estate strategy is seen as a byproduct of the hunt for top-tier tech talent.
“It’s to the point where you see General Electric placing recruitment advertising on mass-market television and relocating their headquarters here, and other companies paying in the $100 per square foot range for space in the most preferred areas,” said Brendan Carroll, director of intelligence at Boston-based Encompass Real Estate Strategy.
A Demandware spokeswoman made it clear that the merger could benefit Boston.
“Overall, the acquisition signals more investment by Salesforce in Massachusetts and, specifically, the Boston market,” spokeswoman Elana Anderson said in an email. “Salesforce already has a growing presence in the Boston region and the pending acquisition will nearly triple its presence. Additionally, Demandware currently has over 100 open positions in engineering, client services, sales and marketing. With this acquisition, Salesforce is entering the digital commerce market segment, so it is about growth, not cost and redundancy.”
It sets up opportunities for a group of office tower developers looking for anchor tenants.
Houston-based Hines recently announced a new equity partner, Chinese developer Gemdale Properties and Investment Corp., to revive a long-stalled development at South Station including a 49-story office tower.
Boston-based HYM Investment Group is looking for anchor tenants to move forward with a distinctive 43-story office tower designed by Pelli Clarke Pelli Architects at the Government Center garage site overlooking Haymarket Square.
And Boston Properties has begun speculative construction of a 175,000-square-foot office podium as part of The Hub On Causeway, its 1.5-million-square-foot, mixed-use redevelopment at North Station.
Salesforce, a cloud-based provider of CRM software with $6.7 billion in 2016 revenues, has been increasingly aggressive in real estate deals around the globe.
In March, Salesforce leased an undisclosed amount of space for a new regional headquarters at 3 Bryant Park in Manhattan, the 41-story former MetLife Building, and bought the naming rights to put its logo on the roof.
In May, it leased 250,000-square-foot for a new regional headquarters in Indianapolis and bought naming rights for the state’s tallest building, the 48-story Chase Tower, which it renamed the Salesforce Tower Indianapolis.
In 2014, it sought to rename one of London’s tallest skyscrapers, the Heron Tower, after itself after leasing six floors. City officials rejected the name, opting for 110 Bishopsgate.
Also in 2014, the company signed on as anchor tenant of the Salesforce Tower in San Francisco, a 1.4 million-square-foot, 61-story “urban campus” designed by Pelli Clarke Pelli Architects and co-developed by Boston Properties and Hines. Salesforce leased 732,000 square feet for 15.5 years for a combined $590 million.
With 430 employees in Massachusetts, Demandware had been looking for up to 200,000 square feet for expansion earlier this year, according to commercial brokers. That requirement was later put on hold.
Demandware occupies 117,000 square feet at 5 Wall St. in Burlington, with three separate leases expiring from July 2017 through October 2019, according to SEC filings. Its Cambridge-based CQuotient predictive analytics arm, part of a 2014 acquisition, moved to 955 Massachusetts Ave. in Cambridge this spring.
Salesforce currently has a small office at 500 Boylston St. in Back Bay, which sold last year for a Boston record-setting $1.3 billion. It was not clear how much additional office space is currently available there. An executive for landlord Oxford Property Group did not return phone calls seeking comment. The building’s website lists approximately 110,500 square feet for lease. But more space could hit the market after Houghton Mifflin Harcourt vacates its 245,000-square-foot headquarters at 500 Boylston in February and moves to 125 High St.
“I would fully expect them to be in cool, funky efficient space that was amenity-rich and had some strong access to public transportation,” said James Elcock, president of Colliers Boston. “Being able to accommodate future growth will be critical.”
