Salesforce.com to spend nearly $700 million to expand headquarters

Fast-growing cloud software vendor Salesforce.com is planning to expand its San Francisco headquarters by more than 700,000 square feet, taking a 15.5-year lease on a 61-story office building under construction.

Salesforce.com will lease more than half of the building, which will be located at 415 Mission Street, and will call its portion the Salesforce Tower.

Its deal with developer Boston Properties calls for Salesforce.com to make US$560 million in lease payments over the 15.5-year term, beginning in the first quarter of Salesforce.com's fiscal 2018, according to a filing with the U.S. Securities and Exchange Commission. The vendor also expects to spend about $130 million on leasehold improvements to the space, the filing adds.

In total, Salesforce.com's downtown San Francisco presence will encompass 2 million square feet by 2017, according to Friday's announcement.

Salesforce.com has been hiring aggressively in recent years, as well as adding staff via a series of acquisitions, as it heads toward $5 billion in annual revenue. It had 13,300 workers as of Jan. 31, compared to 9,800 a year earlier, which is a 36 percent jump. Salesforce.com plans to add more than 1,000 employees in the Bay Area alone this year, it said Friday.

Despite the healthy sum Salesforce.com will pay to lease the tower space, the move could be seen as a conservative one in contrast with its previous plans to build major new headquarters in San Francisco. In 2010, it bought up 14 acres of undeveloped land there for the project but ultimately put it on hold.

The land was worth more than $320 million as of Jan. 31, according to Salesforce.com's latest annual report. In the report, Salesforce.com said it was evaluating its needs for office space and that selling the land was one option on the table.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com