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Ranting, Raving, and Rithmetic in Long Island City

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Just a little cobble-stoned village

YIKES, it took less than a week for the tables to turn on local WeWork rival Knotel, or at least for the press to start snooping around and poking holes. According to a headline in Crain’s, Knotel is plagued by vacancies. Unfortunately the story is behind a firewall, but what is viewable is this:

Roughly 260,000 square feet of Knotel’s space is presently empty, marketing materials for the company indicate, and about 574,000 square feet will be vacant within the next six months. That combined square footage represents nearly a third of the company’s New York City portfolio.

Ok, so by my back-of-the-envelope math 1/3 of 1/3 of its NYC space is empty = 1/9 = ~11%. Mehh. Another 2/3 of 1/3 = ~22% will be vacant within the next six months. That doesn’t seem unreasonable considering the flexibility of not having to sign a long term lease is largely viewed as the main advantage of working from a co-working space. And free beer.

As disasters go I’ve already become inured due to the outlandishness of the WeWork unveiling and debacle, with the existence of ScentBird a close second. Money can’t be shoveled into the furnace fast enough.

Exhibit B is this week’s $438 million recapitalization of an industrial/office building on 49th Ave just east of the Hunters Point LIRR station, which other than nearby mass transit access has little else to offer. Sure the building has a massive footprint, but it’s only 7 stories! A valuation nearing half a billion dollars seems awfully high for a property like this in an area like this.

Numbers that seem a little more logical are shared in an article about the transformation of the Paper Factory Hotel into …something else. Not sure what exactly, there’s some We-ish co-doing pixie-dust aspect to the niche, but the numbers scratch out somewhat logically. For renters anyway:

Renters can stay for a maximum of 29 days. Rates for that full term start at $2,300 and include Wi-Fi, utilities and services such as professional cleaning and linen changes. By comparison, the average monthly rent for a studio in Long Island City was $2,757 in September, according to brokerage MNS. And that standard rental would also require a security deposit and possibly a broker’s fee.

Once again the property is kind of in no-man’s land, but for a short term turnkey rental in a newish unit that’s furnished, $2300 seems reasonable for a renter. As for whether the investors make money, I’ll just assume the game plan is to sell or recapitalize it before that is determined.

Moving up the valuation scale and literally hitting closer to home(s) and at a scale we can all understand, are a pair of 3-bdrm apartments available to rent in LIC at very reasonable – might I say affordable? – prices. Sure, they’re both way north of the bridge, but still technically in Long Island City,
and newly renovated too. Try this on for size: the asking prices are $2,842 and $3,500 a month.

All that math on a Friday, my head hurts. Instead of ranting any longer I’m going to step out of my office in midtown, walk half a block to the nearest WeWork and request a tour. ‘My what lovely brew taps…’

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