Yelp Closing New York, D.C., Chicago Offices In Shift To Remote Work
Yelp is closing three offices in major U.S. cities and shifting to a fully remote workforce, its CEO announced Thursday.
The company is shuttering offices in New York, Chicago and D.C., while keeping a reduced footprint in Phoenix, in response to an employee survey that found 86% would prefer to work remotely, Yelp CEO Jeremy Stoppelman wrote in a blog post.
In the post, titled "The Future of Work is Remote," Stoppelman said it became clear, more than two years since the pandemic began, that the company didn't need an office presence. He said the company began reopening offices about nine months ago, but it didn't require employees to return. In the three offices it is closing, weekly office utilization averaged less than 2%.
"The most telling signal for us that people strongly prefer remote work has been the under-utilization of our offices," Stoppelman wrote in the post.
He said the company plans to close the three offices on July 29. But he didn't detail its plans for getting out of the leases to which it has committed.
In New York, the company has a 70K SF lease at 200 Fifth Ave. that expires in 2024 and a nearly 200K SF lease at 11 Madison Ave. that expires in 2025. The Fifth Avenue building is owned by L&L Holding Co., and the Madison Avenue building is owned by SL Green Realty Corp. and PGIM Real Estate. It began quietly shopping both spaces on the sublease market in January 2021, The Real Deal reported.
In Chicago, Yelp has a 132K SF lease at Vornado Realty Trust's theMart building that expires next year. The company in early 2021 put about 60K SF of that space on the sublease market.
In D.C., Yelp in 2017 signed a 52K SF lease that expires in 2029 at Beacon Capital Partners' Terrell Place building in Chinatown. The District provided tax breaks for the company through a tech-focused program, and Mayor Muriel Bowser touted the deal as a sign of the city's "thriving tech scene."
Yelp's announcement is the latest hit to the office market from the tech industry shifting to remote work. Last month, TaskRabbit announced the closure of offices in San Francisco, New York, London and Austin as it pivoted to remote work. Overall office occupancy has begun to tick up nationwide, but it is still at 44% of pre-pandemic levels in the 10 major markets that Kastle Systems tracks — and below that figure in New York, Chicago and D.C.
CORRECTION, JUNE 24, 11:45 A.M. ET: Yelp leases an office at 200 Fifth Ave. in Manhattan, not 100-104 Fifth Ave., as a previous version of this story incorrectly stated. This story has been updated.