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Co-working and flexible office leases con- tinue to be a real estate juggernaut, especially in New York City, which leads the non-traditional office space market in the US. Last
year, WeWork became the largest private
occupier of office space in Manhattan. When
the co-working giant hit 5. 3 million sf in
leases, it surpassed JPMorgan Chase which
had been the borough’s largest office tenant.
A Cushman & Wakefield report noted co-working companies’ leasing totals about 13
million sf. So, although co-working represents
only approximately 3% of Manhattan’s office
space because the stock is so large, small
percentages can still represent a significant
amount of space.
According to the Office of the State Controller
in New York, there are approximately 550 million
sf of total office space in New York City. The three
largest business districts are Midtown, Midtown
South and Downtown—all targeted areas of co-
working operators.
Hudson Yards, the largest private development in the history of the US spans 28 acres. The
$25 billion development adds another 18 million
sf of commercial and residential space to
Manhattan. As businesses leave office space to
head to the new product on the West Side, that’s
more inventory that could go flexible.
A Yardi Matrix December 2018 special report
titled “Shared Space: Disrupting the Traditional
Office” set forth the largest US markets for co-working, after Manhattan. It listed Los Angeles
with 4. 7 million sf, San Francisco with 3 million
sf, followed by Dallas and Seattle both tied at 2. 2
million sf.
In January 2019, a CBRE report stated co-working accounts for more than 25 million sf in
the top 30 office markets across the US.
Although some industry watchers see non-tra-
ditional office spaces as a trend, most experts
see it as here to stay in some form or another.
Traditional stalwarts in the industry are accom-
modating new leasing arrangements. Savills
has set up an online brokerage service Wethere
to help tenants find flexible space. CBRE
launched Hana, a service to help institutional
property owners with flex space.
The top five co-working office space operators by number of locations, according to the
Yardi Matrix report are ( 1) Regus, 782 locations,
17,360,872 sf ( 2) WeWork, 227 locations,
13,422,918 sf ( 3) Premier Business Centers, 83
locations, 1,561,947 ( 4) Knotel, 64 locations,
1,236,263 sf ( 5) Industrious, 55 locations,
1,261,770 sf.
The real estate market intelligence company
notes in its report that the non-traditional office
sector “is in a nascent phase, so the pace of
growth is likely to pick up in coming years.”
site, which includes a 6,200-sf vacant single-story building and a
1,500-sf parking lot. The day prior,
The day prior, Sterling bought the asset from the Karl B.
Schurz Trust for $55 million through a highly structured off-
market transaction in which the company signed a 30-year
ground lease with a fee interest purchase option. It originally
intended to sublease the space to LVMH, but the latter opted to
purchase it instead. Sterling’s Brian Kosoy and Jonathan Mendis
sourced 456 N. Rodeo Dr. in an off-market capacity.
Closed in March, the deal represented the most
expensive per-sf price paid for a retail asset in the US
last year, at $17,742. Later in the year, LVMH bought
the asset next door, paying $245 million, or $11,011
per foot, for a 22,250-sf retail space at 468 North
Rodeo Dr.
456 N. Rodeo Dr.
1 Yardi Systems Inc
3 PNC Financial Services Group
5 Marcus & Millichap
7 W P CAREY INC
10 Northmarq
17 Crexi Tech
22 AG Net Lease Acquisition Corp
25 PGIM
27 ARC Properties INC
31 Bellwether Enterprise
41 Overhead Services INC.
45 Northmarq
C4 Capital One
Renaissance Rialto
