Commercial real estate firms, co-working companies join forces
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Commercial real estate company Cushman & Wakefield is betting that one solution to the problem of too much vacant office space is co-working. The brokerage announced Monday that it would form a partnership with WeWork and is planning to invest $150 million in the co-working company ahead of its second try at an initial public stock offering.
That’s a relatively small bet, but it follows similar deals in the co-working industry made by office-space giants like CBRE and Newmark.
What does this all mean for landlords, tenants and the endangered species formerly known as the office worker?
With the current surplus of space, just take a look at the deal you can get on a New York City sublease, said Alex Cohen, a commercial real estate broker.
“You could pay 50% of what a tenant is paying,” Cohen said.
One option for landlords trying to cope with the rough market: Lease to a co-working company. If they’re to be trusted, that is. “They have a reputation in light of the last three years of being a very risky proposition,” he said.
Some co-working companies have gone bankrupt or tried to get out of leases prematurely. Traditional real estate brokerages can lend credibility to co-working firms by shacking up.
But the bigger reason behind these deals? Companies looking for office space aren’t looking for long-term commitments, said hybrid workforce consultant Cali Yost.
“Instead of investing in long-term leases in satellite locations, they will have more flexibility in co-working spaces around that headquarters location,” Yost said.
Whether they’re going the co-working route or not, building owners are desperately trying to make the office seem less like a place you have to go and more like a place you want to go.
“You see landlords adding restaurants, adding gyms,” Cohen said.
A gym could be enticing. After all, it’s an excuse to keep wearing basketball shorts during the workday.
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