Quirky, a startup for crowdsourcing inventions that filed for Chapter 11 bankruptcy on Tuesday, has pulled the plug on its 60,000-square-foot New York City office space at the Terminal Stores complex in Chelsea, The Real Deal has learned.
Flextronics International USA, a contract design and manufacturing firm with plans to buy a Quirky subsidiary, agreed to sign a new lease for the full space occupied by Quirky.
Quirky’s downward spiral began this summer when the firm, rapidly hemorrhaging money, was forced to lay off 159 employees. The once-promising San Francisco-based platform raised $185 million to date, in funding from General Electric and other venture-capital investors, but was down to $12 million in July. It had eight full years remaining on its lease.
“Things were always going well,” said Savills Studley’s Greg Taubin, who brokered Quirky’s lease in Chelsea, as well as in San Francisco. “But then the brakes were put on, and we had to immediately take action. The best move was to release them of liability.”
The startup, which reported $50 million in revenue last year, appeared to be on the road to long-term growth. The optimism was reflected in its appetite for New York City office space.
After launching in 2009, Quirky grabbed a 5,500-square-foot space at 628 Broadway in Noho. In 2011, the company moved Waterfront Realty’s 1.2 million-square-foot Terminal Stores office complex at 261-275 11th Avenue, where it took 27,500 square feet. Eighteen months after inking a 10-year lease, it tacked on another 14,000 square feet. The office space, at 60,000 square feet, spanned a portion of the sixth and seventh floors – and was the largest of Quirky’s four global offices.
Quirky paid below-market rents at the Chelsea warehouse complex, in the mid-$30s per square foot, sources said.
Representatives for the landlord could not be immediately reached for comment.
Quirky and Uber, last valued at $51 billion, have been the primary tech tenants at the complex, which is undergoing a conversion from mini-storage space to office. Uber signed a 10-year lease for 52,350 square feet last year.
Meanwhile, Flextronics’ new lease marks the San Jose, Calif.-based company’s first office in New York. The company made a deal to allow Quirky to remain in a small portion of the office on a short-term, rent-free basis, according to the Wall Street Journal. Flextronics made a $15 million bid for Quirky subsidiary Wink. Quirky, which had a total of 90 employees as of Tuesday, plans to seek offers for its remaining assets at an auction in November.
“That a company has already leased the space shows the demand from the TAMI sector in the New York City office market,” Taubin said.