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Knotel once hoped to be the next WeWork. And as the pandemic rages on, it’s facing similar headwinds as its co-working rival. The flex office provider is looking to trim 60 percent of its 4.8 million-square-foot global portfolio, and slash its leases in the U.S. and Canada from 3.4 million square feet to just 500,000 square feet, Business Insider reported. Knotel’s goal is to lower its rent obligations from $15 million per month to $2 million and bring its North American revenue up to $10 million annually. The company is also reassessing its business model, according to BI. Instead of paying rent to its landlords, it may shift to management agreements wherein it operates the space on the landlord’s behalf, thus sharing in the profits.
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Office employees are getting used to the perks of telecommuting and expect them to continue even after the pandemic ends, but most aren’t ready to abandon the office entirely, according to a recent survey. A majority of employees want to continue working from home at least two days per week, according to the brokerage’s survey of more than 2,000 workers globally. Only 26% want to work from home full time after the Covid-19 pandemic passes. Most workers also expect their bosses to support their work-from-home needs, including a dedicated allowance, coverage of electricity and internet expenses and technology tools, the survey found. Still, employee engagement has dropped off as work-from-home drags on. Most workers surveyed agreed that the office is more conducive to collaboration, with 66% of respondents preferring a hybrid model.
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SL Green Realty obtained a $1.25 billion construction loan to redevelop a skyscraper in Manhattan, pushing forward with investment even as New York offices remain largely empty and the city braces for another wave of Covid-19. The new building is located at 25 Madison Avenue. The construction-financing deal for One Madison Avenue, in the Flatiron district, is being led by Wells Fargo, SL Green President Andrew Mathias said in an interview. Internal demolition has begun on the project, which has no committed tenants yet. Bank of America, Toronto-Dominion Bank, Deutsche Bank, Goldman Sachs and Axos Bank also are in the lending group, Mathias said. “The building delivers in 2023, so we have confidence in getting through this period,” Mathias said. “Our position as developers with this kind of vision and certainty generally gets rewarded in New York City.” SL Green is gutting and transforming the property, which overlooks Madison Square Park. The landlord is keeping the base of the existing building and plans to develop a 530,000-square-foot tower on top of it, bringing total space to 1.4 million square feet.
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The pandemic continues to take a massive toll on the city, with Covid-19 cases again on the rise and no clear time frame for when life will get back to normal. As workers stay out of office buildings, local retailers lose out on the revenue they spend on lunches, after-work drinks, even trips to the drugstore. The downturn has led many businesses, especially larger national chains, to stop paying rent or close up shop altogether, leaving the city's commercial real estate market reeling. However, as senior reporter Eddie Small discovered in this week's cover feature, one business owner's loss can be another one's gain. Smaller companies and mom-and-pop shops that couldn't afford a storefront thanks to the rents driven sky-high during the past few years are now finding that landlords are willing to work with them on more reasonable leases. Small-business owners finally have leverage, seeing as landlords would rather have their space filled than have it sit idle until the economy picks back up.