WeWork, Knotel, and other co-working firms are flooding the office market with newly vacant space and rapidly adding risk to the historically safe asset class.
- Dig Deeper: Office buildings have always benefited from tenants being locked into long-term leases, but the rise of short-term, co-working leases threatens to change the guaranteed steady of income and create a more volatile market, the Wall Street Journal reported.
- By the numbers: Co-working executives estimate that around 50% of all flexible office space in major U.S. cities is currently available for lease. That would help push the overall office-availability rate in San Francisco to 21.8%, the highest figure on record. In Manhattan, the estimated availability rate after factoring in similarly high co-working vacancies is 15.9%, the highest since 1995.
- Why it matters: Analysts expect these figures to continue rising, as more companies look to cut costs and embrace remote work. Landlords are starting to offer short-term deals to compete with co-working firms to fill vacant space. [WSJ]