By Miriam Hall, Bisnow
There was a time when people worked without steam rooms or snack bars — but that is the workplace of yesteryear, and most landlords in the city are being forced to step up their game.
The rise of coworking and flexible workspace providers in New York City has redefined the office leasing market and workplace culture, and it has put traditional office property landlords in something of a complex position.
On one side, they compete with these coworking firms for tenants. On the flip side, the coworking companies are tenants themselves and — increasingly — partners on projects.
Some landlords are embracing the new world of flexibility. RXR Realty, for one, has racked up a slew of arrangements with the biggest names in coworking. Its 536K SF office building at 530 Fifth Ave., for example, is home to the biggest Convene location yet.
A 116K SF space, Convene — a shared conferencing and coworking company that has positioned itself more as a landlord-friendly amenity rather than a traditional coworking tenant — has four floors designed for both individual members and small-to-midsized companies with teams of 10 to 100 employees.
The location, which formally opened last month, features all the amenities du jour: exposed ceilings, flattering lighting, sleek open plan work areas, phone booths, indoor greenery, cozy chairs in blush pink and feature walls.
Convene has raised $260M in venture capital so far and also has large locations at RXR’s 75 Rockefeller and in Brookfield Place where Saks Fifth Avenue used to be. Both Brookfield and RXR are among Convene’s investors.
At the 530 Fifth Ave. location, there are “luxury rainfall showers” and steam rooms, wellness areas and fitness studio with Peloton bikes, as well as grooming stations and nap suites.
The company has also formed a partnership with Eden Health, a healthcare network, that offers primary care, mental healthcare and insurance navigation in a small area in Convene.
At the opening celebration last week, where guests were offered Prosecco, macaroons, massages, blood pressure checks and mini acupuncture sessions, RXR Realty CEO Scott Rechler spoke about adjusting to the presence of flexibility in the traditional office environment.
“It is a lot of handholding and meetings with different lenders and trying to explain the model,” he told a gathered audience.
Along with 530 Fifth Ave., the company has reached an agreement with Airbnb to convert 10 floors at 75 Rockefeller Center into around 200 units.
In the same building, WeWork is taking 90K SF across four floors, but rather than sign a traditional lease, as it does with most of its hundreds of locations, WeWork and RXR have entered into a cost- and profit-sharing agreement.
In that building, Convene is running a member’s club in the 32nd floor penthouse.
“At 75 Rock, it required actually refinancing the building, because the existing lender didn’t like the business plan,” Rechler said. “So we’ve had to bring in a new lender.”
The RXR platform manages 71 commercial real estate properties and investments with an aggregate gross asset value of approximately $20.5 billion, comprising approximately 31.4 million square feet of commercial properties, inclusive of approximately 6.0 million square feet of buildings securing debt and preferred equity investments, a multi-family residential portfolio of approximately 2,500 units under operation or development, and control of development rights for an additional approximately 3,700 multi-family and for sale units in the New York Metropolitan area as of June 30, 2019. Gross asset value compiled by RXR Realty in accordance with company fair value measurement policy and is comprised of capital invested by RXR and its partners, as well as leverage.