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WeWork’s spectacular failure at going public has thrown a spotlight on the vitality of the coworking sector in general — and it looks like one of its main rivals may have a big task ahead in filling its space.
Flexible workplace provider Knotel, which is valued at over $1B, has nearly 800K SF that is either vacant right now or set to be vacant in the next year in New York City, Crain’s New York Business reports.
About 260K SF is empty now, and around 574K SF is due to be vacant in the next six months, per the publication. That 800K SF is about a third of Knotel's total New York City portfolio, which focuses on enterprise tenants who generally make plans and commit to space further in advance than smaller users.
“We have added nearly 2M SF in New York in the last 12 months,” Knotel co-founder Amol Sarva told Crain's, saying he expects his firm will be able to fill the space. “While deals get announced we don’t typically get possession very fast — so the volume we are marketing at any moment isn’t necessarily 'vacancy,' but rather mostly upcoming supply availability.”
Knotel, which reached its $1B valuation back in August when it closed on $400M in funding, has for some time billed itself as a more stable alternative to the once-glorious WeWork.
In November last year, Sarva said he expected Knotel to be bigger than WeWork within 15 months.
WeWork, the largest private occupier of space in New York and London, is licking its wounds after a disastrous initial public offering attempt that saw its former CEO Adam Neumann replaced, and a bailout from SoftBank, its main investor.
In a $9.5B deal, the Japanese conglomerate took an over 80% ownership stake and provided WeWork $5B in new financing, including a $1.5B wire transfer last week to ensure it had enough cash to maintain its operations.
Office landlords remain skeptical of the company, however, and some have formulated plans for if the firm were to start handing back space, as Bisnow reported this week.
"We now have 250 locations in 15 cities and about 5M SF. And most of our demand is from enterprise companies,” Knotel Head of Real Estate Jeremy Bernard said at Bisnow’s New York State of the Market event last week. “So, we're focused on the gateway cities, we're focused on where these global 2,000 companies are.”
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