Yelp, PwC test options on Manhattan’s sublease market

Yelp’s 11 Madison and PWC’s 300 Madison. (SL Green, Brookfield)

 

Yelp, the website popular for its crowdsourced business reviews, has two offices near Madison Square Park in Manhattan — but that may not be the case for long.

The San Francisco-based company has quietly let brokers know that the spaces — one at SL Green Realty’s 11 Madison Avenue and the other at 200 Fifth Avenue — are available for sublease, but that doesn’t mean it’s abandoning New York altogether. Instead, the company is likely to see which of those spaces draws the most interest from the market, and then consolidate its employees into the other, sources familiar with the company’s plans told The Real Deal.

 

A spokesperson for Yelp confirmed that the company is reducing its New York City footprint and plans to maintain an office in the city. The location will depend on its sublease options, the spokesperson said.

Yelp’s evaluation of its office spaces — about 200,000 square feet on Madison Avenue and roughly 70,000 on Fifth Avenue — is an exercise that many companies with multiple locations are going through as they look to rightsize real estate footprints.

What rightsizing looks like will be determined by how many employees return to offices, and how much room will be needed for social distancing. But how much real estate those companies can offload on the sublease market will be just as influential, if not more so.

PricewaterhouseCoopers is another company that believes it can get by with one of its two Manhattan offices. The Big 4 accounting firm has quietly fielded sublease offers for its 800,000-square-foot office at Brookfield Properties’ 300 Madison Avenue and its 240,000-square-foot space at Vornado Realty Trust’s 90 Park Avenue, sources familiar with the spaces told TRD.

“As PwC continues to adapt to virtual work practices and adopt new ways of working in order to best support our people and clients, we are reviewing our physical office space on an ongoing basis to ensure that it matches our needs in each market,” a spokesperson for the company told TRD.

As the pandemic has forced many companies to reevaluate their office needs, the amount of space available for sublease in Manhattan is approaching record levels.

The borough ended 2020 with nearly 19 million square feet of available sublease space, according to Savills. That accounts for roughly 29 percent of all the available office space in Manhattan, approaching the high point of 30 percent hit during the Great Recession.

Some tenants have been able to take advantage of the sublet opportunities, which generally offer rents at rates lower than companies will get on direct deals with landlords for comparable spaces.

Late last year Noom, which makes a popular weight-loss app, subleased more than 113,000 square feet at 5 Manhattan West from the advertising firm R/GA.

Tags: Commercial Real Estate, Manhattan, office market, Subleasing

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