Co-working is coming for two of the country’s leading office building owners.
Blackstone Group-owned Equity Office and Houston-based Hines have both released RFPs looking for partners to help them gain experience in the co-working business currently dominated by WeWork, according to Reuters. Equity Office is particularly interested in figuring out how to make tenants more interested in their Howard Hughes office complex in Los Angeles, and the company expects responses to their RFP in the next few days.
WeWork has lately been seeing explosive growth and is currently valued at $20 billion. The firm has launched a gym and elementary school in recent months and announced an $850 million acquisition of the Lord & Taylor flagship on Fifth Avenue in October.
New York in particular has become an attractive space for co-working thanks to factors including a construction boom, high job growth and a strong ability to attract young workers. Marcus Moufarrige, COO at the flexible workspace company Servcorp, said tenants are no longer as interested in strict leases for five or 10 years but want more flexibility to manage their needs more effectively.
“The yield from flexible space is much higher than from traditional space,” he told Reuters. “This is driving the landlords to fear disruption and therefore try to pre-empt it with the RFPs.”
In New York, Equity Office owns Park Avenue Tower, 1740 Broadway, 5 Bryant Park, 44 Wall Street and 114 West 41st Street. Hines has a stake in SL Green’s One Vanderbilt and is also the developer behind the condominium tower 53 West 53rd Street, better known as the MoMA Tower.
Upcoming changes to the federal tax code could also be a benefit to co-working firms. [Reuters] – Eddie Small