WeWork’s woes aside, the coworking industry will continue to gain traction as tenants push for more flexibility in their use of office space… but the trend’s overall effects on the office sector will be mixed, analyst firm Morningstar forecasts in a new research note. Office REITs would be wise to not position their rent rolls with overexposure to coworking firms, partly due to the leasing model being untested in a downturn scenario. And brokerage firms may see opportunity in the demand generated by coworking, but should also “remain vigilant” to new competition as such firms increasingly offer real estate services. (Morningstar)
Less than a year after political pushback over millions in tax incentives prompted ecommerce giant Amazon to dump plans for a second headquarters in New York City, it has signed a lease for a sizeable chunk of office space within the Hudson Yards district, home to the country’s largest private commercial development. In the past few years, the new glass towers rising within the Far West Side neighborhood have drawn some of the world’s most powerful companies. Amazon, it seems, doesn’t want to miss the party and has signed for 335,000 square feet at 410 Tenth Avenue, a 20-story, 638,000-square-foot tower owned by office REIT SL Green. The building is now 96.2% leased, per the landlord. Local politicians pointed to the deal as proof Amazon remained interested in expanding within New York City even without hundreds of millions in incentives. (Curbed)
A smaller Tennessee deal evidences a major commercial real estate trend at play — the consolidation of U.S. Postal Service (USPS) property. Facing increasing operating expenses and flat revenues, USPS has been quietly shedding its postal buildings. The latest USPS to be scooped up is the EastGate Post Office in Chattanooga. A newly formed REIT, Postal Realty Trust, paid just over $2 million for the nearly 64,000-square-foot building. Since its May IPO, the REIT has purchased more than 200 properties and its portfolio now totals nearly 500 properties in 44 states. The REIT is growing a portfolio of Postal properties to lease to federal government and other tenants. (Chattanooga Times Free Press)
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