According to SL Green, New York City’s largest landlord, WeWork’s potential pull-back will not hurt the city’s leasing sector.
SL Green’s leasing director Steve Durels said that every big tech tenant is heading to the city as West Coast expenses have gone through the roof. Big name companies, like Google and Microsoft, are not looking for boutique buildings, but large ones with big infrastructure.
WeWork’s footprint in the SL Green portfolio is not huge, with about 150,000 square feet of space on Fifth Avenue, but Durels said the firm finds value in having WeWork apart of its portfolio.
Currently, coworking spaces account for 12% to 15% of the office market, but this number is not expected to drop due to WeWork’s recent struggles since the company only takes up 1% of Manhattan’s office space.
Other operators like Knotel, Regus, Industrious and Convene are still experiencing a healthy pace of growth.
“Flex space is no longer a niche offering hidden among building stacks of longterm leases,” said Nicole LaRusso, CBRE’s tri-state director of research and analysis. “Not only is it prominent in the buildings that it occupies but it is also at the heart of real estate strategies from landlords to corporate occupiers. The flexible real estate model has long been a viable solution for freelancers remote workers and start-ups, but now represents a structural shift that is rapidly gaining ground among larger enterprises because of the flexibility, speed and capital deferral it allows that is not widely available through traditional leasing.”