New York, NY—Increasingly startup proptech companies are implementing revenue-sharing agreements with a landlord in lieu of rent by building out amenities that tenants want in the building. The end result is a revamped building designed to meet the current demand for such services that cost the landlord relatively little.
Indeed, landlords benefit doubly for these deals, says Jahn Brodwin, senior managing director of FTI Consulting. They are able to offer new amenities that they didn’t pay to create that appeals to their existing tenant base and they share in the revenue that these new amenities attract, as well as drive rent and occupancy, he says.
“For example, there is a 25-story building here in the heart of Manhattan,” explains Brodwin. “Twenty floors are for offices and 5 floors are for common areas. Common areas include a restaurant, a library, bar space plus meeting areas. We may also soon see small boutique hotels on the top of office buildings.”
One result of consolidating office space with creative and lifestyle-oriented spaces is that there will be underutilized real estate on the market. It will be interesting to see how those spaces get used, Brodwin tells GlobeSt.com. One of the many suggestions include spaces for more car-charging stations, etc.
“People are now more interested in experiences and the commercial real estate industry now realizes that. We are moving in the right direction,” says Brodwin.