BuzzFeed is subleasing its New York corporate headquarters space as part of the money-losing digital media company’s plan to cut costs.
BuzzFeed, which went public in December through a special purchase acquisition company, will sublet the entire 13th through 16th floors at 225 Park Ave. S between east 18th and 19th streets near Union Square, Madison Square Park and Gramercy Park, to Monday.com, the New York-based firm said in a regulatory filing with the Securities and Exchange Commission on Tuesday.
Monday.com, a work management software provider, will sublease 109,517 square feet through May 30, 2026, BuzzFeed said. Monday.com will pay a fixed monthly rent of $757,000 in cash, subject to periodic increases, according to BuzzFeed, which also owns other media brands including news aggregator HuffPost and food network Tasty as well as its namesake website.
BuzzFeed, which bought rival media company Complex Networks in December, will relocate its headquarters to Complex’s current home base at 229 W. 43rd St. in Times Square.
A BuzzFeed spokesperson told CoStar News the building has “ample offices and production space,” and the company offers remote and flexible work options for employees.
BuzzFeed’s move comes as the company reported this month its second-quarter net loss widened to $23.6 million from $789,000 a year earlier, hurt in part by both higher operating costs and interest expenses. CEO Jonah Peretti, who founded BuzzFeed in 2006, said on the earnings call that the combination of inflationary pressures, rising interest rates and ongoing supply chain disruptions have had an impact on advertising spending from marketers.
He said BuzzFeed is “proactively” keeping its costs in check, including employing a “critical hiring process” to focus on talent such as vertical video creators that aid its “highest priority initiatives.” He also said BuzzFeed will reduce its real estate footprint.
BuzzFeed isn’t the only media company that’s watching costs. The New York Times said this month it’s looking “closely at costs … given the uncertain macroeconomic environment.”
That may be another worrying sign for New York and other office markets, many of which are still hurting from the slow return-to-office rate. Security firm Kastle Systems’ latest keycard data released Tuesday showed New York’s office use rate declined to 38.3% as of Aug. 10 from 40.1% in the prior week. A 10-city average rate also dipped to 43.2% from 43.6%, signaling well below half of U.S. office workers are back in the office more than two years into the pandemic.
New York’s office vacancy rate has shot up to a record-high of 12.2%, according to CoStar data. The U.S. total, meanwhile, has risen to 12.4%, the highest level in at least 10 years.
Against economic uncertainties, a July survey by research and consulting firm Gartner of more than 200 chief financial officers and finance leaders showed that real estate and facilities management are among areas that were the most likely to face budget cuts in the next 12 months.
Some 72% of CFOs want to trim their organization’s real estate footprint by the end of 2022 as hybrid work becomes more popular, Marko Horvat, vice president of research at Gartner, said in a statement this month. Still, not all companies are cutting back. Horvat noted 9% of companies “are differentiating by increasing their real estate spending in the next 12 months.”
Leasing activities have shown well-resourced employers seeking properties with appealing amenities and easy transit access to entice workers back to the office. Many have also pointed to desirable offices as key to helping them attract and keep talent amid the so-called flight-to-quality trend.