Co-working Is Here to Stay

Class B buildings with deep floor plates that once accommodated large companies are now accommodating co-working operators, writes Brill.

NEW YORK CITY—A small space occupier (less than 5,000 square feet), historically and practically, has always been at a disadvantage for leasing space in major urban markets. More often than not, they lack exposure to the business of office leasing, including an understanding of their own occupancy requirements, market conditions, and appropriate lease terms. Typically, the opportunity they offer a broker to collect a small leasing commission fails to keep a broker’s attention for any period of time and limits their access to listings to the “classifieds.”

On their own, the small space user effectively wanders the internet and usually works directly with the landlord of an obsolete class B or C building with no amenities, who accommodates them essentially on the landlord’s terms. In Manhattan, small space rental rates have continued to increase despite a 90% average occupancy rate for small spaces. Meanwhile, the supply of New York City class B and C office space is expected to continue a steady decline from a peak of approximately 237 million square feet in 2003 to approximately 220 million square feet in 2025. Considering small business (10 or fewer employees) represents approximately 80% of all business enterprises and approximately 87% of new business start-ups, this is not good news for a small space occupier.