UPDATED, April 5, 1:17 p.m.: Can startups plying their trade in the short-term office market enjoy the same success that Airbnb has in the hospitality sector? In Manhattan, they’re certainly trying, with firms like LiquidSpace and PivotDesk hoping to make inroads with corporate tenants and large landlords.
PivotDesk, a matchmaker between tenants and subtenants on a month-to-month basis, claims around 1,000 companies list space on its site every day, up from 500 in September. LiquidSpace, a short-term office-listing site, claims around 1100 spaces in New York City are currently listed on its site (when TRD checked on Friday afternoon, 450 spaces were vacant and available). So far, these sites rely heavily on other small startups for their business – but they are looking to change that.
LiquidSpace started out as a listing site primarily for space rented by the hour in co-working facilities and office centers. It has since added monthly rentals, and landlords and larger office tenants looking to sublet office space now make up the biggest share of its listings, according to Mark Gilbreath, the firm’s founder.
“When we made the move into monthly and larger transactions, we knew that we wanted to serve clients whose need went beyond what (co-working spaces and office centers) could fulfill,” he said. LiquidSpace has partnered with office landlords like Swig Company and Irvine Company, and now lists space at some of their California properties, Gilbreath said. He added that the firm is also in talks with New York landlords, but declined to give names.
PivotDesk is on a similar trajectory. Its bread-and-butter has been startups that want to make some extra cash by subleasing their excess space until they grow into it. But no longer, said founder David Mandell.
“The trend is actually moving towards bigger companies,” he said, noting that companies like the Guardian, Tough Mudder and Makerbot use PivotDesk. According to Mandell, the firms also works with landlords like Jamestown Properties, which listed office space at a Boston building through the site.
PivotDesk, LiquidSpace and competitors like ShareDesk may be seeing that they can’t achieve scale without courting bigger clients. LiquidSpace, for example, wants to add 100 million square feet of office space to its site. If these startups only play in the startup sandbox, that’s not going to happen.
Cushman & Wakefield’s Jamie Katcher believes the short-term listing sites could eventually win over a larger share of the office market. “You can’t be just right out of the gate and go to a Fortune 500 company,” he said, adding that he sometimes refers tenants that aren’t ready for a long-term lease to PivotDesk.
Michael Mandel, CEO of commercial real estate information firm CompStak, cautioned that short-term listing sites are likely to appeal primarily to smaller firms. But he remains bullish on their potential. “Offices leases are at a bare, bare minimum one year, but normally three to 10 years, and it’s impossible to predict what your needs are going to be three years from now,” he said. “As an entrepreneur I can see a lot of value in that.”
CORRECTION: an earlier version of this post misstated the number of listings LiquidSpace claims to have in New York City.