Yelp, the crowdsourced review app, is closing its offices in New York, Chicago and Washington after finding that almost all its employees preferred to work remotely.
It's another blow for the office market, which has softened considerably since the onset of the pandemic two years ago instituted new hybrid and remote work policies nationwide.
The news was announced Thursday in a blog post written by CEO Jeremy Stoppelman, who co-founded the San Francisco-based firm back in 2004.
According to Stoppelman's post, titled "The future of work is remote," Yelp will be officially closing its New York, Chicago and Washington offices on July 29 as it also reduces its footprint in the Phoenix area.
The company occupies roughly 250,000 square feet in New York, 133,000 square feet in Chicago and 7,000 square feet in Washington, a Yelp spokesperson told CoStar News.
Yelp's 72,000-square-foot Scottsdale office outside Phoenix is expected to be reduced to just 40,000 square feet once a lease expires for a floor it occupies there, the spokesperson said.
Yelp reopened its offices nine months ago but did not tell employees they needed to return, saying it was moving to a "remote-first" model. Globally, only about 1% of its workforce chose to come back into the office every day.
Less Than 2%
The offices in New York, Chicago and Washington, specifically, "saw a weekly average utilization of less than 2% of the available workspaces," according to Stoppelman.
"The most telling signal for us that people strongly prefer remote work has been the under-utilization of our offices," Stoppelman said.
And there's been no indication that remote work has hurt the company's bottom line, he added.
"Our record revenue in 2021, which carried through to our first quarter results this year, demonstrate just how productive we are in a remote work environment," Stoppelman wrote in his post.
Stoppelman did not say if the company planned to close any other offices.
Yelp inked a lease this past September for 53,600 square feet at the Salesforce East office tower in San Francisco, the nation's most expensive office market.
Nationally, the U.S. office market remains soft as the pandemic continues to change how office tenants use their space, especially in major urban markets.
About 159 million square feet of space was available for sublease in the first quarter of this year, according to CBRE, lower than its peak of 162 million in the third quarter of 2021 but still historically high.
Ryan Ori contributed to this story.