Property owners push back against coworking surge

by Steve Randall02 Jan 2019

Commercial real estate landlords are positioning themselves to battle the surge in coworking specialists who are picking up valuable clients.

The growth of coworking businesses such as WeWork has meant that some companies are using the flexible approach of shared space rather than taking a traditional lease.

WeWork has seen strong growth and is estimated to be worth U$42 billion and Bloomberg reports that it is also building an investment division to buy its own sites; currently it relies on long leases in existing buildings that it does not own.

Bloomberg’s research finds that many property management firm executives are concerned by the rise of WeWork and other businesses in the coworking sector including Blackstone Group and Tishman Speyer.

While coworking firms began by serving a need for flexible office space for small startups, they are now increasingly renting to large corporations; 30% of WeWork members are at companies with 1000+ employees.

"A lot of people originally thought of the shared office-space providers as bringing tenants," Tony Malkin, chief executive officer of Empire State Realty Trust Inc., owner of New York's Empire State Building told Bloomberg. "But I think now we've seen -- particularly with WeWork and other providers' expansion into the enterprise solution -- that it's really much more about disrupting the relationship of tenants to landlords, of tenants to brokers, of brokers to landlords."

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