Co-working companies are making a killing, but that’s of little solace to the commercial landlords who own the space.
In fact, the CEO of one shared workspace company thinks landlords should enter joint ventures or profit-sharing agreements with co-working firms, scrapping the traditional loan in the process.
At a panel discussion hosted by leasing management company VTS, Industrious CEO Jamie Hodari cited his firm’s space in Union Square, where his company pays the landlord $67 per square foot, and in turn charges customers $320 per square foot, a mark-up of almost 400 percent that the landlord has no stake in, according to Crain’s.
“It’s the wrong relationship for both sides,” Hodari said. “It’s wrong for tenants, and it’s wrong for landlords.”
In February, Hodari said he expected to open in 50 and 60 locations by the end of the year. The company currently operates in 25 cities, and unlike its competitors WeWork and the Yard, it focused on opening outside of New York first.
The company raised $80 million in a Series C funding round led by Fifth Wall Ventures and Riverwood Capital in February, bringing its total raised to $140 million. [Crains] — David Jeans