Google’s director of NYC real estate, Paul Darrah, sits down with Cushman & Wakefield’s Marlene Manzella to discuss co-working and shared spaces EXCLUSIVELY for GlobeSt.com.
By Marlene Manzella|January 07, 2019 at 04:00 AM
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NEW YORK CITY—The parameters for corporate real estate needs keep changing, and as each new start-up, incubator, or even established business division grows or fades, its space needs change as well. More is being demanded from facilities, such as amenity spaces and more on-site benefits like child and medical care. The design, location and quality of an organization’s work environment is a critical factor in recruitment, retention and overall satisfaction of its employees.
The New York Chapter of CoreNet Global, a leading organization for corporate real estate professionals, has regularly in its event programming addressed the topics of owning vs. sharing vs. leasing spaces. To further explore these questions, we caught up with Google’s director of NYC real estate, Paul Darrah, to hear his views on the current state of corporate real estate. Do companies still envision office space as an asset to be owned or leased? What impact will co-working and shared space have on their portfolios?
Darrah has 33 years of real estate experience, is a past chair and a current advisor of the CoreNet NYC board of directors and also leads the organization’s executive leadership council.Marlene Manzella, director of brokerage services at Cushman & Wakefield’s Midtown Manhattan office, is an active member of CoreNet and chair of the CoreNet NYC newsletter committee.
Manzella: What are the reasons a large company might look to either lease, own or share their real estate? What are the advantages of each?
Darrah: There is a benefit for all three. It makes sense to own in a market where the company has a strong presence, because it provides them with full operational control and shows their commitment to a location. Leasing is common in hub markets. It provides identity and flexibility in size within a secure environment. Coworking is a good solution when opening an office in a new market, where you need to get on the ground quickly but you’re still not sure where or how much space you need immediately. It provides the ability to scale and allows time to better understand a market before fully committing.
Manzella: What business drivers and space needs favor shared office solutions?
Darrah: Shared office solutions allow a company to benefit from shared amenities—allowing employees to feel like they are part of a larger population and enabling them to get access to amenities without having to pay for them on their own. Generally, compared to a traditional lease, it is not cost effective to be in a co-working space for more than 24-36 months, although it might make sense to pay the premium for access to these shared amenities. Typically, this would be in a place where you don’t have a big enough office need to justify having your own amenity space.
Manzella: Do you view shared office space as simply a short-term solution or do they have tangible long-term benefits?
Darrah: Shared space can be a long-term solution when your office will never grow beyond a certain size and if it makes sense to give your employees access to amenities without having to lease and buildout a space yourself. It can also provide a global solution. Sometimes, going out to build your own locations around the globe is much more difficult. Certain countries have strict rules and difficult restrictions on building, owning or leasing.
Manzella: What are some risks or disadvantages of sharing space?
Darrah: The largest challenge with sharing space is ensuring confidentiality, given you’re in less of a controlled environment. When sharing space, you also lose company culture since employees are not fully connected to the larger corporate community.
Manzella: How do you affect change at your company?
Darrah: Google is known for its amazing work space and amenities that are designed to help Googlers thrive. A key opportunity to affect change is to focus on process improvement that enables us to be more efficient in our delivery and operational support model as we continue to scale in size. The most important parts of my role are to continue to deliver real estate and seating capacity that enables the business to grow, to provide unique work space and amenities that enable the business to be productive and for Google to continue to attract and retain talent.
The views expressed in this article have been provided by Marlene Manzella and Paul Darrah and are not those of ALM’s real estate media group.
More than half of the quarter four leasing activity for properties over 25,000 square feet took place in the Airport Area.
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