Why Choose Coworking Over a Traditional Lease?
With the recent buzz over “coworking”, many businesses, large and small, have expressed substantial interest in the growing trend. Coworking, traditionally defined, is when a business pays for a shared space on a monthly basis. This shared space ranges from private offices, to open spaces where businesses work outside the privacy of a private office. The nature of the shared space is dependent on the coworking provider, many of whom have their own distinctive style and ambiance. Some offer affordable office space, whilst others target the premium market. The benefits of NYC coworking includes the increased social mobility of an otherwise bland work environment. Even if a business chooses a private office, the shared amenities and shared spaces provide opportunities for workers from different businesses to cross pollinate, and have a conversation. This is the social benefit of coworking. The financial benefit of coworking is that the tenant, the business entity paying for the space, has more financial flexibility. If one’s business expands rapidly, then the business is stuck paying for inadequate office space according to the traditional lease terms. Coworking’s month to month lease structure allows businesses to scale on a month to month basis, as opposed to traditional leases which typically range from two to five years.
Are Coworking Spaces More Affordable Than Traditional Leases?
Now that we have established what coworking is, the question becomes, are coworking spaces more affordable than traditional leases? To answer this question we must understand the coworking business model. Coworking companies will sign a long term lease on an office space from a landlord. The coworking company will then take this leased space, and then lease it to businesses on a month to month basis. Coworking companies profit from the difference in what they charge business to rent their shared space month to month, from the expense of signing the long term lease. With such a simple business model, it is unsurprising that new NYC coworking companies have been emerging every month. In addition, landlords have caught on, with many of the largest landlords in New York City providing their own NYC coworking solutions. The premium charged for the month to month lease structure must be compared to the benefits, which include social mobility and financial flexibility. In most cases there are so many coworking NYC options provided that businesses become overwhelmed with the sheer amount of choice, and end up missing out on their best office space, settling for lesser space.
What is the Best Coworking Option for You?
New York City contains hundreds of coworking spaces from an equal amount of coworking companies. Each coworking company targets their own market, some providing ultra high end space, whilst others provide affordable office space. The sea of options is vast with each coworking company, and most recently landlords, providing their own shared spaces at different price points. The ensuing chaos that arises from searching for the ideal NYC coworking space is where tenant brokers from Optimal Spaces bring order, finding our clients the NYC coworking spaces that suit their requirements.
However, the costs due to uncompetitive bidding and arcane rules and regulations makes costs 2-7 times more expensive than other world cities.
Subways are using 1910 technology. They cannot run at higher capacity due to old switches which the MTA says can be repaired in the next 20 years. Why repair and not use military grade WIFI.
Tunnels? They desperately need to fix the train tunnel damaged during sandy. Power levels from corroded cables reduce capacity and tunnels are in danger of collapse if not repaired/replaced.
Added capacity with new planned rail tunnels to New Jersey have been cancelled by Federal Government.
East Side access is 10 years delayed with no imminent opening.
Why is no one talking about structural reforms to fix systems that is allowing these critical infrastructure projects to be fixed promptly?. What about bringing in the Army Corps of Engineers to resolve?
Conventional thinking was that small and rapidly growing companies, or companies that were uncertain about longevity of project would rent shared office space.
This limited the shared office market to companies or divisions under 10 people. Now huge firms like Amazon who just rented out an entire WeWorks at 34th Street and Microsoft renting shared office space near the Watson project in the east village.
Time will tell how many other firms follow.
This shows how cash hungry and struggling the retailers are. This also shows the depth of the market for shared office concepts. WeWorks continues to expand and is filling their facilities. That is a great indication of market depth. WeWorks is just one of many providers of co-working centers.
New York City submitted a bid to get the 2nd Amazon headquarters which means 50,000 jobs. New York City has 4 locations or areas where they could build and an existing amazing transportation system. New York City also has a deep bench of talent for Amazon to draw on and is therefore a likely city to be selected. Amazon recently announced they were hiring 2,000 employees in N.Y. for advertising and will move to the former Skyrink building.
The city is about to make it harder to build hotels in New York City manufacturing zones. The current proposal will require a special permit. This will increase costs and time to get sites ready. The bigger problem is this will give unions a greater opportunity to make the job site union which will drive up costs for new hotel rooms. This law will make the existing inventory more valuable as the city is creating a higher barrier to entry.
- Amount of space per employee continues to decline. 20-30 Years ago average density was 200-300 Rentable Square feet per person. 10-20 years ago size declined to 150-250 RSF per person. 5 Years size declined to 100-200 RSF. per person … and the trend continues
- Destruction and conversion of existing office stock to residential and hotels. !4 Million square feet of office space was removed from the Manhattan office market to alternate uses.
- Limited new construction at affordable price points.
With Amazon’s latest bid for Wholefoods, the consumer should start to see consolidation in the supermarket space. Purchase price of Whole foods 13.7 Billion. Wealth destruction of other supermarket chains $40 billion. That indicates the amount of carnage expected to come in the near future. What is Amazon going to go after next pharmacy??
Starbucks Coffee’s is closing all its 379 Teavana stores by the spring of 2018.