One of the city’s largest flex-office providers is shuttering its location at the Empire State Building.
Virgo Business Centers will be closing its workplace at the iconic skyscraper at the end of May when its lease expires, sources told The Real Deal.
“Their term is up,” Empire State Realty Trust CEO Tony Malkin wrote to TRD via email. “Their business model cannot support the market rent.”
A representative for Virgo Business Centers could not be immediately reached for comment. The company occupies the entire 26,000-square-foot 59th floor in the landmarked building at 350 Fifth Avenue.
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Founded in 1998 by CEO Joseph Scharf, Virgo Business Centers operates the traditional short-term office model, where members can rent private offices with shared amenities on a month-by-month basis, or even by the hour.
The company has four other locations in Midtown. While its footprint is dwarfed by flex-office giants like WeWork and Knotel that grew by exponential proportions in recent years, Virgo is one of the larger companies among a second-tier group of firms offering short term space in the city.
The meteoric rise and catastrophic fall of WeWork had many questioning whether co-working and short-term office companies could survive an economic downturn. But the Covid-19-induced shutdown of the city has put the flex-office model under strain — and has given members reason to demand concessions.
Some of the industry’s largest players are considering changes to their business models once the city finally reopens.
Contact Rich Bockmann at rb@therealdeal.com or 908-415-5229