In its quest to have positive cash flow later this year and stem massive losses, Compass Real Estate announced on Friday a third round of corporate layoffs and seeks to sublease part of its global headquarters at 90 Fifth Avenue in New York City.
The real estate giant, which has approximately 800 agents in Dallas-Fort Worth according to its site, says cuts are limited to corporate staff and NOT agents.
Since the beginning of 2021, Compass has reported nearly $1 billion in losses. In several reports, the company said these were the final staff cuts needed to reach its strict cost-reduction targets later this this year. As for the number of employees affected, no information has been offered to media outlets. The brokerage laid off 450 in June 2022.
Compass wants to sublease part or all of its global headquarters at RFR Realty’s 90 Fifth Avenue, Harrison Connery and Rich Bockmann report. Compass occupies about 89,000 square feet in the Class A building, floors 3 to 10. Prior to the pandemic, the brokerage also subleased space on floors 5 and 8. The asking rent for the space is $60 per square foot and Compass’ lease runs through 2025.
According to the Daily Dirt, Compass apparently seems to be embracing WFH strongly:
The brokerage previously said it would not be closing offices as part of its mission to cut costs. The brokerage maintains that subleasing space at the Fifth Avenue property doesn’t really count because A) it subleased space in the building before Covid, when it had a ton of cash, and B) the building is for employees only, not agents, who have a separate hub at 110 Fifth Avenue.
In various statements, the brokerage has decided that employee office headquarters are not needed for “branding and market presence.” However, the company said it has no plans to consolidate offices, unless it’s a mergers-and-acquisitions situation. Compass spent $135 million on office leases in 2021, up from $122 million in 2020. Its future lease liabilities at the end of last year totaled more than $564 million, according to the Daily Dirt, with some offices possibly overlapping in primary markets.
In February, Compass will release its 2022 annual results.
