Co-working firm Grind pays below-market rents in Midtown South, gives landlord cut of profits

Shared office provider moves into 1216 Broadway with 18K sf lease

New York /
Apr.April 28, 2016 01:46 PM

Co-working startup Grind is building on the growth of the shared workspace sector’s presence in the New York City office market by opening its fourth Manhattan location at 1216 Broadway in NoMad.

The company is taking 18,000 square feet on the second and third floors of the four-story property, with the new space – which will also feature an outdoor terrace – representing Grind’s largest office to date and its first venture into the popular Midtown South market.

While Grind is among a growing number of shared office providers in the city – with the largest, WeWork, recently being valued at $16 billion – the rapid rise of the co-working industry, driven by demand from startups and small businesses, has prompted concerns that an economic downturn could burst what some see as a bubble.

But the company structured its lease at 1216 Broadway to protect itself from such a downtown, Grind CEO David Beale told Crain’s. In exchange for paying below-market rents, Grind will grant the property’s landlord, Raizada Shubindu Vaid, a cut of its profits at 1216 Broadway.

Calling the arrangement “a collaboration between us and the asset owner,” Beale told Crain’s that the landlord “ends up with a premium to what the space would generate from a conventional market rate lease.” Beale declined to disclose what Grind is paying for the space, however.

The co-working company has a similar arrangement at 140 West Street in Financial District, where it leases space from Verizon at below-market rents and splits profits with the space’s owner.

That saves Grind from being locked into any costly space commitments should the city’s real estate market falter, in which case the price of the short-term leases it has with its co-working members would likely slip rapidly.

WeWork recently also made its first foray into Midtown South, taking 60,000 square feet at Charles S. Cohen’s 135 East 57th Street. [Crain’s] – Rey Mashayekhi


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
The Princeton Club flag in front of 15 West 43rd Street (Google Maps)
Paper Tigers: Princeton Club defaults on $39M mortgage, may lose digs
Paper Tigers: Princeton Club defaults on $39M mortgage, may lose digs
56 Leonard, PH 58 (Getty, Sotheby's)
$30M unit latest in string of deals at ‘Jenga Tower’ as record sale looms
$30M unit latest in string of deals at ‘Jenga Tower’ as record sale looms
Rendering of the Meadowlands Sports Arena with Convention Center (Meadowlands 2040 Foundation)
Convention center planned near American Dream mall
Convention center planned near American Dream mall
Donald Trump with the Trump National Golf Club Westchester (Trump National Westchester, Getty)
Trump Organization facing criminal probe over Westchester golf course
Trump Organization facing criminal probe over Westchester golf course
HUBB’s John McCarthy and with 510 East 88th Street and 181-199 Columbus Avenue (Google Maps)
HUBB NYC doubles down on Manhattan apartments
HUBB NYC doubles down on Manhattan apartments
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...