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Wall Street Journal: Startups Turning Office Market Upside Down by Offering Short-Term Leases

According to The Wall Street Journal:

A startup real-estate technology firm is looking to take on shared office company WeWork Cos in one of hottest new areas of commercial real estate: providing short-term office space to some of the biggest U.S. companies.

Convene launched nine years ago as a firm that provided conference, meeting and training spaces. Now it is starting to provide short-term, more flexible workspaces as well. The New York-based company sets up ventures with landlords or leases out big spaces itself wholesale, then carves them up and rents them out to businesses.

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For traditional landlords, the trend offers a short-term payoff but a longer-term risk. Firms like Convene and WeWork have become big tenants, helping boost revenue. But the shorter, flexible leases that tenants increasingly prefer make it trickier for owners to finance buildings because long-term cash flow is less assured.

“You have a riskier profile for an office building,” said Danny Ismail, analyst with Green Street Advisors.

There are also plenty of risks for firms like Convene and WeWork. For starters, demand for their space has yet to be tested by an economic downturn.

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To read the full article, click here.