While some landlords, commercial real estate brokers and Wall Street observers were expressing concern that the bankruptcy filing by coworking office space giant WeWork would be a devastating blow to the shared office space sector, a flexible office space operator with locations in Westchester and Fairfield remains bullish on the business.
Diamond Properties now has shared workspace locations under its Velocity Flexible Workspace brand operating in White Plains, Pleasantville and Hawthorne, two facilities in Mount Kisco and a location in Stamford. In addition, there is a Velocity outlet in Cincinnati, Ohio. Diamond has 85 properties with 14 million square feet in 12 states in its portfolio. Its real estate ranges from office buildings to bowling alleys.
“We believe that as fewer people commute to the city, they will be inclined to lease individual offices closer to their homes,” Diamond’s Senior Vice President Mark Blandford said. “There is a lag in office demand, as many companies are still working remotely and have existing leases in New York City. As these leases start to expire, we expect there will be an uptick in demand in Westchester, Fairfield and surrounding suburban markets.”
WeWork filed for Chapter 11 bankruptcy protection in November of last year. The initial filing in a federal court in New Jersey showed the company had assets of just over $15 billion and debts of more than $18.5 billion. In filings with the Securities and Exchange Commission, WeWork previously had said that it had a global footprint with 779 coworking office locations. It recently was reported that WeWork’s co-founder Adam Neumann, who was ousted as the company’s CEO, wanted to buy the company.
Matt Mastrianni, leasing manager for Velocity who is based in Mount Kisco, told the Business Journal, “Based on what we’ve seen especially in Westchester the demand for coworking space and flexible office spaces has been very robust and I think the market really is receptive to flexible terms. The office space that we’ve got at Velocity typically is offered at a good value and all-inclusive pricing.”
Mastrianni noted that WeWork has been involved in the larger markets and was heavily committed to office space in New York City.
“I think that maybe that (New York City) is a little bit tougher now,” Mastrianni said. “I have had people on tours mention WeWork but we’re seeing a pretty healthy market for coworking.”
Mastrianni said Velocity’s original location was on Virginia Road in North White Plains and the brand expanded from there.
“We’re finding that a lot of professionals that typically before the pandemic would head into the city everyday for work are now sticking in Westchester more and they’re looking for offices that are ‘plug and play,’ where you can show up on day one with your laptop and get right to work. Maybe they worked in home offices for extended periods during the pandemic and they just want a good distraction-free office at a good value. That’s really what our bread and butter is.”
Mastrianni said that Velocity refers to its lessors as members and they typically are going to be small business owners and entrepreneurs.
“The whole Velocity concept is centered on flexibility,” Mastrianni said. “The terms are flexible. We’ve got examples where they’ve started out with one office and then added multiple offices. We’ve had businesses that have grown so quickly that they’ve gone from coworking offices to larger traditional office spaces within the Diamond Properties portfolio. It’s a range of businesses but the base of businesses is small business owners and entrepreneurs.”
Mastrianni said that the majority of leasing arrangements are on a month-to-month basis and that Velocity works with its members to meet their changing needs, including needs for technology. He said that Velocity members always have keycard access and can use the facilities at any time on any day.
“A small business owner has the firewall-protected enterprise grade IT package that you might see at a Fortune 500 company,” Mastrianni said. “It’s actually quite important now in the market. IT security and internet speed are very important. Also, we can basically customize their furniture configuration to set up the office exactly as they like.”
Mastrianni said that finance and CPA practitioners, lawyers, technology entrepreneurs and management consultants make up a large portion of Velocity’s members.
“The expansion into coworking is a strategic one for Diamond,” Mastrianni said. “When we have office vacancies in the Diamond portfolio we’ll always at least look to consider doing a Velocity. Rather than waiting for the perfect commercial tenant for a large space we’ll build-out a Velocity location and rent it to predominately small business owners. I think the future for shared workspace is bright. Hybrid work is here to stay and having coworking offices I think aligns with where the market is.”
