Rents are the Same for Co-working Providers and Traditional Tenants

Traditional office deals and coworking leases make no difference to landlords when it comes to the rent they collect, according to a new MIT report. Coworking companies have expanded in recent years to become the leading office tenants in some of the world’s largest real estate markets like London and New York City. The providers were willing to enter into longer lease terms with a higher base rent when many companies were shedding space and wanting shorter commitments.  But 10 years of coworking lease data in six of the largest U.S. office markets show landlords view coworking tenants as viable substitutes for any traditional office tenant, according to the report from MIT’s Real Estate Innovation Lab, called “The Financial Impacts Of Coworking: Rental Prices And Market Dynamics In The Commercial Office Market.” “It looks like the landlord is doing this calculus and saying, ‘This works for us,’ especially if they have the same credit quality as the other tenants in the building,” said MIT Real Estate Innovation Lab Director Andrea Chegut, who co-authored the report. “But there was no cost-benefit really hanging out in either [the landlord or tenant] direction.”