Slack is shifting out of San Francisco headquarters

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Slack is leaving its San Francisco headquarters at the end of the month and relocating its employees to parent company Salesforce’s nearby 61-story office tower, dealing another blow to the city’s struggling downtown area.

The news was shared internally with employees on Friday and follows a series of recent actions by Salesforce to cut costs amid a slowing economy and pressure from activist investors. Salesforce announced in January that it would lay off about 8,000 employees and downsize its real estate footprint to reduce costs by billions of dollars.

A Salesforce spokesperson confirmed the news in a statement to Fortune, “This is part of what we announced in January. We will bring all employees together in the Salesforce Tower.”

Slack signed a 10-year lease for its 500 Howard Street headquarters in 2017, when the company was still privately held. The 230,000-square-foot deal was among the largest real estate deals in San Francisco that year, according to an article in the San Francisco Business Times at the time. Slack designed the interior of the 10-story building to resemble different parts of the Pacific Crest Trail, with living plant and moss walls, waterfall and glacier-themed rooms with stained glass walls, and a “volcano tea lounge” in the Boba -Drinks will be served.

According to company sources, Slack now plans to vacate the building by February 24.

Salesforce acquired Slack for $28 billion in 2020. Slack founder Stewart Butterfield announced that he is leaving the company in December.

Slack’s exit from 500 Howard Street is the latest setback for once-busy downtown San Francisco, which has struggled to return to pre-pandemic occupancy rates. According to real estate brokerage firm Cushman & Wakefield, the city’s overall vacancy rate was 24.1% at the end of 2022, compared to 19.9% ​​at the end of 2021. Other big tech companies have also laid off employees and given up office space in San Francisco this year, including Meta and the Microsoft own GitHub.

On Monday, Twilio announced a second round of layoffs and said it would close some offices, although the company added that its San Francisco headquarters would not be affected.

According to a regulatory filing by Salesforce in January, the company will face “exit fees” of $450 million to $650 million as a result of the then-announced office space reduction and between $1.4 billion and $2.1 billion in total costs, including layoffs , arise as a result of the restructuring.