Forward-thinking companies are ditching their office leases
The Coronavirus pandemic certainly turned the business world upside down. From layoffs to budget cuts, businesses everywhere quickly did everything they could to cut down on costs in 2020. And now it seems we’ve settled into a state of push and pull, where employees are craving flexibility and trust, and leaders are having to weigh long-term business decisions that will reduce costs and keep them competitive.
One way that small and large businesses are doing this is by canceling their business leases. Although this might mean large upfront cancellation fees in the short term, it’s obvious that executives see past the initial sting (see Pinterest section below) and are recognizing the long-term opportunities to save money. Here are a few examples of companies that have ditched their office leases.
Yelp
Very recently Yelp announced that it would close its offices in Chicago, New York, and Washington D.C. citing that “the future of work is remote.” The CEO, Jeremy Stoppelman, reported that these offices were seeing a less than 2% utilization rate of available workspaces. But it’s clear that Stoppelman was able to take off his rose-colored glasses, see reality for what it is, and was excited to embrace the changing landscape of remote work.
Early on in the pandemic, Pinterest saw the opportunity to cut costs and lean into remote work. They also saw the opportunity to hire a globally distributed team and increase their diversity. “A more distributed workforce will give us the opportunity to hire people from a wider range of backgrounds and experiences.” Todd Morgenfeld, CFO and head of business operations of Pinterest said. But this came at a big upfront cost - $89.5 million to be exact. What a statement though! To pay this much just to cancel a lease speaks volumes about the opportunity Pinterest saw ahead. The company’s leaders obviously saw that this one-time fee was a very small price compared to what they were going to save in the long run and that offering greater flexibility to their workforce was going to give them a big competitive advantage as an employer.
Salesforce
With its iconic Salesforce building in San Francisco, Salesforce seems to be struggling with its decision to continue to offer flexible work to its employees, as well as keep its real estate footprint. Just this month they listed nearly half of its 43-story Salesforce West tower, as reported by SF Gate. However, a company spokesperson said they are looking forward to reoccupying the space in the future, although this comes after the February 2021 decision to let their employees work remotely full-time or go hybrid.
It’s unclear what path Salesforce will take in the future of work, but they seem to be understanding that their current real estate holdings aren’t giving them the same value as pre-pandemic.
The office isn’t the only answer.
Radious is proud to partner with businesses to offer them flexible office space at a fraction of the cost. We recently launched in Milwaukee, Wisconsin, and are partnering with SafeNet Consulting which was struggling to find something cost-effective for their teams to get together. As reported by Milwaukee Business Journal, SafeNet employees didn’t want to return to the downtown office largely due to concerns about traffic and commute time, but paying $60,000 per year for a traditional coworking space was a hefty alternative.
Radious can be your office space solution too. Read more about what we offer in this one-sheet.
Written by Cassidy Johnston