Slack is abandoning its San Francisco headquarters at the end of the month and moving its employees into parent company Salesforce‘s nearby, 61-story office tower, dealing another blow to the city’s struggling downtown neighborhood.
The news was announced internally to employees on Friday, and follows a series of recent moves by Salesforce to cut costs amid a slowing economy and pressure from activist investors. Salesforce announced in January that it would lay off roughly 8,000 workers and shrink its real estate footprint as it tries 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 Salesforce Tower.”
Slack signed a 10-year lease for its headquarters at 500 Howard Street in 2017, when the company was still privately held. The deal, for 230,000 square feet, was among the largest real estate transactions in San Francisco that year, according to a story at the time in the San Francisco Business Times. Slack decked out the 10-story building’s interior to resemble different parts of the Pacific Crest Trail, with living plant and moss walls, waterfall and glacier-themed rooms featured colored glass walls, and a “volcano tea lounge” serving boba drinks.
Slack now plans to be out of the building by Feb. 24, according to sources at the company.
Salesforce acquired Slack in 2020 for $28 billion. Slack founder Stewart Butterfield announced that he was leaving the company in December.
Slack’s exit from 500 Howard Street is the latest setback for San Francisco’s once-bustling downtown area, which has struggled to return to pre-pandemic occupancy rates. The city’s overall vacancy rate at the end of 2022 was 24.1%, compared with 19.9% at the end of 2021, according to real estate brokerage firm Cushman & Wakefield. Other large tech companies have also laid off workers and dumped office space in San Francisco this year, including Meta and Microsoft-owned GitHub.
On Monday, Twilio announced a second round of layoffs and said that it would close some offices, though the company added that its San Francisco headquarters would not be affected.
According to a Salesforce regulatory filing in January, the company will incur $450 million to $650 million in “exit charges” as a result of office space reductions announced at the time, and between $1.4 billion and $2.1 billion in overall charges, including layoffs, as a result of the restructuring.
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