WeWork “cannibalized” office industry: Moskovits

Landlords talk co-working, Amazon and opportunity zones

Clockwise from left: Toby Moskovits, Long Island City, and Laurent Morali (Credit: jlwelsh via Flickr)
Clockwise from left: Toby Moskovits, Long Island City, and Laurent Morali (Credit: jlwelsh via Flickr)

Landlords were asleep at the wheel in the early days of New York’s co-working boom and are in danger or repeating the mistake with co-living companies, according to Toby Moskovits.

“We allowed WeWork to cannibalize our business,” Moskovits, CEO of Heritage Equity Partners, said at the 2018 Real Estate Industry Executive Forum hosted by Bloomberg and accountancy firm Berdon on Wednesday. Instead of analyzing WeWork’s appeal and starting to offer their own flexible, furnished office spaces, property owners were happy to lean back and let WeWork do the work, costing them millions in potential profits.

Now, as companies like Common are bringing a similar business model into the apartment market, property owners have a chance to learn from past mistakes. “These guys are coming in, and you’re going to allow them to figure out what’s really just a little bit of common sense? Or are you going to get in that business yourself?” she said.

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Moskovits shared the stage with Kushner Companies’ president Laurent Morali, MCR Development’s CEO Tyler Morse, the William Kaufman Organization’s CEO Jonathan Kaufman Iger, L&L Holding’s Laura Rapaport and Berdon’s Maury Golbert. Much of the discussion revolved around WeWork, which several landlords clearly see as a competitor, not a partner.

Iger argued that it’s hard for landlords to compete with venture-backed companies like WeWork, which don’t need to be profitable right away and can offer tenants discounts and other perks. “The tenants are getting whatever they want, and at some point the landlords will have to put their foot down,” he said.

A day after Amazon announced plans to move at least 25,000 employees to Long Island City, Rapaport said she hopes the influx can lead to more stores and restaurants and a less “sterile” neighborhood. “That’s a very large concentration of people with disposable income,” she said.