Co-working startup Grind is planning to close its Garment District location this month and is negotiating to give the space back to its landlord, which last year opened its own competing shared-office location in the building, sources told The Real Deal.
Grind is in discussions with Charles Aini and Isaac Chetrit, the owners of 1412 Broadway, to terminate the roughly 14,000-square-foot lease the company holds in the 24-story building at West 39th Street, multiple sources told TRD.
Representatives for Grind did not respond to a request for comment, but sources said the company butted heads with Chetrit and Workville, the shared-office platform Aini invests in.
About a year ago, Aini and his partners – brother Ezra Aini and investor-broker Dori Jack Dashti – launched a 14,000-square-foot Workville on the building’s 21st floor, one floor below Grind. Chetrit, who owns the 415,000-square-foot property along with Aini, is not involved in Workville.
Multiple sources said Grind was losing money at the location. What’s more, company co-founder Benjamin Dyett left Grind last month, though the split appears to be amicable.
“While I will no longer be involved in the day to day of Grind, you can of course expect to see me around the place — every entrepreneur needs a work-home and there’s no better one out there then Grind,” Dyett wrote in a Medium post in January.
Details of the lease-termination negotiations weren’t clear, but landlords will sometimes agree to take a space back in exchange for a payment from the tenant based on the value of the remaining term. The asking rent on the co-working provider’s deal was reportedly $50 per square foot.
The 1412 Broadway location was removed from Grind’s website after TRD made an inquiry earlier this week.
Grind, which opened its first location at 419 Park Avenue South in 2011, is one of several dozen co-working startups that have expanded over the past couple years to comprise a significant sector in the city’s office market.
As of June 2016, about 180 co-working spaces occupied 6 million square feet in Manhattan, Brooklyn and Long Island City, according to research from Newmark Grubb Knight Frank. Co-working accounted for 1.2 percent of all Manhattan inventory.
Grind ranked as the 16th-largest co-worker provider with 47,386 square feet, according to Newmark.
In November, Grind teamed up with Verizon to manage the first of several shared-office locations the telecommunications giant plans to roll out. Grind is reportedly managing the 34,000-square-foot space at 140 West Street, the office portion of which is owned by Verizon.
And earlier last year the startup opened an 18,000-square-foot location at 1216 Broadway in NoMad.
The lease was structured so that Grind would pay below-market rent in exchange for sharing a cut of the company’s profits with its landlord.