The Daily Dirt: Will Knotel go the way of WeWork?

An analysis of New York's top real estate news

TRD New York /
Feb.February 03, 2020 11:52 AM
Knotel CEO Amol Sarva (Credit: Sasha Maslov)

Knotel CEO Amol Sarva

The head of Knotel celebrated WeWork’s crash. But his company is plagued by similar issues.

Amol Sarva, CEO of the office-space firm, has trolled WeWork for years. In 2017 he parked a school bus in front of WeWork’s Chelsea headquarters emblazoned with a message: “Graduate from Co-working.” When WeWork laid off hundreds of employees last year, he gleefully tweeted: “WeWork layoffs. Sorry folks. We didn’t mean to.”

But the company’s trajectory seems to parallel WeWork’s in a few key ways, David Jeans reports. Knotel — with a somewhat eccentric figure at the helm (sound familiar?) — laid off close to two dozen people earlier this month. And at the end of last year, the company reportedly had nearly 800,000 square feet coming vacant in New York City. During a Jan. 27 conference call, Sarva told reporters that “profitability [is] very much in sight,” but didn’t provide a timeline. The company’s attempts to bring in more revenue from new business lines have largely failed to take off.

In addition, former employees told TRD that Knotel has a reputation for paying vendors late.

Sarva dismissed the vacancies as an old metric that is used only by the “traditional” real estate industry. He said “flex [office space] is about liquidity — you need to have a liquid portfolio to serve these customers. That’s the way to think about it.”

“Last year was an insanely great year for us — we started as a minion and all of a sudden we are kind of a big deal,” Sarva said. “It feels more and more like all eyes are on us as others have exited the field. And we are going to try and take responsibility for that.”

Part of the heightened attention stems from the scrutiny many unicorns are now facing. With a $1.3 billion valuation and an unclear path to profitability, Knotel and others will likely need to go to extra lengths to prove they aren’t the next WeWork.

What we’re thinking about: What do you think of the recently released recommendations to reform the city’s property tax system? What will be the impact? Send a note to [email protected].

CLOSING TIME

Residential: The priciest residential closing recorded Friday was for a co-op unit at 895 Park Avenue on the Upper East Side, at $12.3 million.

Commercial: The most expensive commercial closing of the day was for several commercial condo units at 33 West 37th Street in Midtown, at $86.4 million.

BREAKING GROUND

The largest new building filing of the day was for a 12,188-square-foot residential building at 63 West 125th Street in Central Harlem. Chaim Dahan filed the permit application.

NEW TO THE MARKET

The priciest residential listing to hit the market was for a house at 22 Thompson Street in Soho. Compass’ Valerie Artzt has the listing.
— Research by Mary Diduch

Word of the day

Tax deed – A legal document conveying the title to real property to a new owner that a municipality obtained from the origi­nal owner’s failure to pay real estate taxes.

A thing we’ve learned…

Housing activists gathered outside 212 Fifth Avenue to call on Jeff Bezos (who owns three units there) to pay a pied-à-terre tax of more than $2.5 million. Of course, that would require legislation, which has not yet materialized this session. The protestors brought a fake, life-sized Alexa to interrogate. The main question? “Can @JeffBezos afford to pay the pied-à-terre tax?” She apparently answered, “Of course, he’s one of the richest people in the world.”

Elsewhere in New York

— A taxi task force issued a report Friday recommending the creation of a $600 million public-private fund to help taxi medallion owners, WNYC and Gothamist report. According to Council member Stephen Levin, the average outstanding debt for medallion owners is $700,000.

— The mayor won’t provide Comptroller Scott Stringer with invoices from NYCHA’s monitor, according to The City. This follows Stringer’s decision not to register the city’s $12 million contract with Bart Schwartz and his firm, Guidepost Solutions.

—Thanks to new rules adopted by the Democratic National Committee, Michael Bloomberg may be able to take part in the next debate, the New York Post reports. The former mayor, who is self-financing his campaign, was previously blocked by the DNC’s individual-donor rule.


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