The market for cryptocurrencies has just seen a severe crash. The precipitous decline in value seen by digital currencies and other blockchain-based products lends weight to many who have viewed the cryptocurrency phenomena as little more than a passing fad.
On the other hand, based by the manner in which crypto businesses have been leasing office space in Manhattan, it would seem that crypto companies will remain here in New York for at least the foreseeable future.
It is quite surprising to learn that companies with a reputation for decentralisation and digital assets are even considering investing in real-world property. At many web3 organisations, such as those dealing in cryptocurrencies and platforms for nonfungible tokens, sometimes known as NFTs, working remotely is a frequent practise. In addition, businesses are rethinking the function of the workplace in light of the success of work-from-home initiatives implemented during the pandemic as well as the following adoption of hybrid work schedules.
But during the last several years, bitcoin companies have been opening new offices in New York or expanding existing ones. These new offices are often situated in less conventional, more outlying areas of the city as opposed to more prominent regions of Midtown Manhattan.
This month, a cryptocurrency platform known as Solana Labs obtained a contract for 20,000 square feet of office space spread over four floors of a brand-new office building located in the Bowery neighbourhood. EmpireDAO, whose name contains the abbreviation for “decentralised autonomous organisation,” has launched a co-working space for crypto entrepreneurs in a building that is covered with graffiti. The facility is located only a few streets away.
According to Newmark, a real estate company, office vacancy rates in Manhattan touched 19 percent in May, which is up from roughly 12 percent before the epidemic. Landlords have welcomed the new category of firms, since many of them have obtained recent rounds of fund-raising.
However, it is not yet apparent how the volatility in the market will effect the long-term viability of certain web3 businesses. And the rush of real estate activity is unlikely to make a dent in the vacancy issue since there are so few of these enterprises, and they tend to accept short-term leases for tiny amounts of space, according to industry analysts. This will make it difficult to reduce the number of vacant spaces.
Offices are where the majority of the activity in the bitcoin world can be found in Manhattan. Savills, a real estate brokerage business, reports leases of more than 5,000 square feet for 30 significant blockchain companies located around the borough. However, the number of enterprises that use less space is unclear.
A great number of web3 enterprises have been drawn to move-in-ready space since it has enabled them to begin operations in a short amount of time. In January, Cipher Mining signed a contract for office space at One Vanderbilt, the newest office building to be developed by SL Green Realty and located near to Grand Central Terminal. The agreement included a total of 6,500 square feet of furnished space under SL Green’s in-house brand of flex office space known as Altus Suite.
However, some are leasing their own apartments and making modifications to them. After becoming the first big cryptocurrency startup in the United States to go public in 2018, the cryptocurrency exchange Coinbase is now subletting 30,000 square feet of space in the Hudson Yards development.
Chainalysis, a firm that specialises in bitcoin data and transactions, has just closed a deal at 114 Fifth Avenue for around 77,000 square feet of space, which is a substantial amount of space in the world of cryptocurrencies. The business had been renting out around one-half of that amount of space in the building on a sublease basis; however, they recently turned the arrangement into a direct lease and acquired ownership of two more floors.
However, in certain instances, web3 is causing changes in the real estate market. For example, from the beginning of last year, WeWork will take bitcoin payments for monthly rent payments. And real estate company Jamestown just just made public their relationship with bitcoin payment processor BitPay, which will make it possible for renters to pay their rent in cryptocurrency.
Since Solana does not expect its staff to make daily appearances, the firm does not aim to fill up its new office at 141 East Houston, where it has taken a lease for a period of ten years, with desk space for employees. Instead, it intends to construct what are known as hacker homes, which are spaces designed to host gatherings and training sessions.
Additionally, Solana intends to occupy a floor at EmpireDAO, the new web3 co-working enterprise, which will be located at 190 Bowery. This building is a six-story former bank that has historic status and was the lifelong residence of the photographer Jay Maisel. The floor that was intended for the stablecoin TerraUSD, which collapsed earlier this month, has been taken over by Solana.
The concept behind EmpireDAO is that it will function as a kind of maker space for the web3 community. According to Mike Fraietta, the creator of EmpireDAO, the organization’s administration system will be based on cryptocurrencies, but the organization’s landlord, RFR, needs payments for rent to be made in the traditional manner.
