In this week’s WAR Report, CRED iQ calculated updated valuations for two office buildings in Manhattan and Chicago with exposure to Yelp as a tenant. Multiple news outlets, including Globe St., The Real Deal, and Commercial Observer, reported in late-June 2022 that online service review provider Yelp plans to close offices in three gateway cities and downsize its presence in other office locations. Yelp plans to close offices in DC, New York City, and Chicago and will also reduce its footprint at a Scottsdale, AZ office building. In a June 23rd blog post, the CEO of Yelp stated that the offices would close on July 29th and the company would focus on a fully remote strategy. The shift to remote work is one of the many headwinds the office sector is facing, in addition to rising availability rates and the prospects of a recession.

One of the properties with a Yelp office slated for closure —11 Madison Avenue in Manhattan, NY — secures $1.075 billion in CMBS debt that is scheduled to mature in September 2025. Additionally, theMART in Chicago, IL formerly secured a $675 million commercial mortgage that was paid off in May 2021. CRED iQ reviewed Yelp’s footprint at both properties and the subsequent impacts of the firm’s departure. Similar to our June 21 Report discussing the impacts of Revlon’s bankruptcy on the commercial mortgage secured by One New York Plaza, the losses of revenue from Yelp on a stand-alone basis are unlikely to put either of these two assets in distress. However, CRED iQ’s base-case valuations considered lower projected cash flows from the loss of Yelp as well as the need to backfill the available space.

CRED iQ valuations factor in base-case (most likely), downside (significant loss of tenants), and dark scenarios (100% vacant). Base-case valuations are presented below. For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.

11 Madison

2.3 million sf, CBD Office, Manhattan, NY [View Details]

Yelp is the third-largest tenant at 11 Madison Avenue pursuant to a lease that expires in April 2025. Since loan origination in 2015, Yelp has occupied floors 14 and 16 (152,232 sf) of the 29-story building and pays base rent of approximately $14.5 million per year for the space, equal to $95/sf. Yelp’s base rent is approximately 14% higher than the average asking rent for the Midtown South submarket as of June 2022, according to CBRE. The firm expanded its space into the 17th floor in 2017 for a total footprint of 191,797 sf, equal to 8.4% of the property’s NRA. In addition to base rent, Yelp also pays reimbursements for operating expenses and real estate taxes.

Eleven Madison was nearly 100% occupied as of March 2022. The property is anchored by Credit Suisse with a lease accounting for 55% of NRA in place through May 2037. Additionally, Sony leases approximately 25% of the building through January 2031. Although, occupancy could potentially decline to approximately 92% with the departure of Yelp, 11 Madison offers some of the largest floor plates in Manhattan and has several advantages over lower quality offices in attracting replacement tenants. Those advantages are necessary in a Midtown South office market with an 18.7% availability rate. Subsequently, occupancy or lease rollover risk do not appear to be near-term credit risk concerns for the property or loan. For the full valuation report and loan-level details, click here.

Property Name11 Madison
Address11 Madison Avenue
New York, NY 10010
MSANew York-Northern New Jersey-Long Island, NY-NJ-PA
MarketMidtown South
SubmarketMadison/Union Square
Property TypeOffice
Size2,285,043 sf
Loan Balance$1,075,000,000
Interest Rate3.56%
Maturity Date9/6/2025
Most Recent Appraisal$2,350,000,000 ($1,028/sf)
Most Recent Appraisal Date7/1/2015
CRED iQ Base-Case Value$2,509,000,000 ($1,098/sf)
CRED iQ Base-Case LTV43%


3.6 million sf, CBD office, Chicago, IL [View Details]

Yelp is the fourth-largest tenant at theMART (formerly known as Chicago Merchandise Mart) pursuant to a lease that expires in July 2023. Yelp occupied 132,044 sf on the fifth floor, which was equal to approximately 3.6% of the property’s NRA. The firm paid base rent of approximately $37.29/sf.

Unlike the stable rent roll of 11 Madison, the tenant roster of theMART has some uncertainty. Occupancy at the property was approximately 89% as of January 2022 but has steadily declined since 2017 after multiple tenants vacated and moved to office space in Fulton Market, a highly favored submarket in the Chicago CBD.

The property’s largest tenant, Motorola Mobility, leases 609,071 sf (17% of the property’s NRA) pursuant to a lease that expires in August 2028. However, Motorola Mobility had a lease termination option that would have been effective September 1, 2023, but notice was due by March 1, 2022. In past years, Motorola Mobility has been actively subleasing portions of its space. It was unconfirmed if the termination option was executed. The building’s second-largest tenant, MTM-MM LLC (6% of NRA), is an affiliate of Vornado Realty Trust, which owns the property.

Altogether, office space only accounts for 55% of the property’s NRA. The property is widely recognized for its showroom and tradeshow space, which accounts for approximately 42% of the property’s NRA. However, showroom space has traditionally struggled in recessionary environments. Operational performance of theMART is worth monitoring given the above developments and observations. For the full valuation report and loan-level details, click here.

Property NametheMART
Address222 W Merchandise Mart Plaza
Chicago, IL 60654
Chicago-Naperville-Joliet, IL-IN-WI
MarketChicago CBD
SubmarketRiver North
Property TypeMixed Use (Office/Showroom)
Size3,648,777 sf
Most Recent Appraisal$1,640,000,000 ($449/sf)
Most Recent Appraisal Date8/30/2016
CRED iQ Base-Case Value$1,012,000,000 ($277/sf)

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About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers to CRED iQ use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities. Our data platform is powered by over $2.0 trillion of CMBS, CRE CLO, SBLL, Ginnie Mae, FHA/HUD, and Freddie Mac loan and property data.