There's a running Twitter (NYSE: TW) joke that nobody really knows what Salesforce (NYSE: CRM) does. But in reality, anyone who works in sales, marketing, or customer relations for a medium- to large-sized company has had a Salesforce encounter. The company exists to move all the record-keeping around these roles into the cloud. Not just that, but its applications actually help streamline workflow and communication, plus allow higher-ups to track just what their sales teams have been doing while out of the office.
So it makes a lot of sense that Salesforce would be in the vanguard of major companies adopting a flexible or remote work culture permanently, post-pandemic. In a way, going remote is the best possible way for the company to reinforce its brand purpose.
How will it ripple out to real estate?
What are the potential implications for real estate? Of course, it reinforces certain sea changes examined in 2020 (i.e., the San Francisco real estate market is in a state of upheaval). But taking a more long-term perspective, it likely indicates some new areas of opportunity are opening up.
Office proptech may finally go mainstream
For one thing, it's way past time commercial office buildings got on the proptech bandwagon. Not only do buildings need to be equipped with great Wi-Fi, but managers need to familiarize themselves with different cyber security solutions, smart climate control, facial recognition software, and more. Yes, this includes even the smaller buildings, and definitely those betting on co-working's comeback. The reasons are multiple:
- Even if employees of large companies are working remotely, they're still employees of large companies. Their privacy must be maintained -- and if they can't guarantee that at home, they might indeed look to a nearby small office space that provides it.
- In the absence of corporate office reception and security and janitorial staff, building managers need to get smart about how they handle signing people in, receiving packages, and making sure the lights are off at the end of the day.
- Remote work sometimes goes hand-in-hand with scheduling flexibility. But no office building with multiple tenants wants to have staff on hand for 24/7 needs. Certain types of proptech were created specifically to handle such needs (i.e., turning the AC on in a certain office when it's off in the rest of the building).
The rise of suburban and small-city satellite offices
Another broad implication reinforces what many commercial brokers have already seen: increased office occupancy in suburbs. It turns out that lots of people need an office setting separate from their home. They need the lack of distraction, the dedicated space, and the peace of mind that no kids are going to spill orange juice on their work laptop. They just don't want to commute two hours for it. Hence, the search is on for quality office space as close to home as possible.
While this isn't directly connected to the perma-remote announcement, there's also something to be inferred from people's dismay over the company's acquisition of Slack (NYSE: WORK). (Four months later, Salesforce's stock price is still suffering from the backlash.) Slack is a tool intended to replace the in-person work dynamic. It's there for group conversations, quick private one-on-ones, and the equivalent of memos posted in the break room. And for some people, it works beautifully. But others really don't feel like it's a substitute for the real office environment.
The bottom line
In the long term, a permanent shift toward remote work is going to benefit Salesforce -- more than it will cloud-based entertainment companies like Spotify (NYSE: SPOT) and Pinterest (NYSE: PINS) that recently announced similar measures. As one of Salesforce's largest end-user groups -- sales professionals -- could attest, working out of an office means adopting new cloud-based software systems, like it or not. The original "road warriors" might have their own personal systems for nurturing leads, tracking productivity, and reporting back to the team, but most of them are being forced to move to Salesforce or a competitor, such as HubSpot Sales Hub.
The more interesting thing to look at in terms of larger implications to the workforce is how Salesforce eventually revamps its San Francisco hub. With most employees adopting a flex schedule that only requires them to come in for tasks best performed in person, how will the existing space be remodeled to maximize those in-person interactions? And what new features will be created to make fully remote workers feel integrated into the larger team?