As cryptocurrency and related businesses continue to grow and intersect with industries like real estate and proptech, they have also begun to take up more office space in Manhattan, from Midtown to Downtown.
Okada & Companya family property consulting and investment company located in Midtown South, represents 40 properties in this submarket and in Midtown, mainly in the Union Square, Flatiron, Chelsea, Herald Square and Times Square districts, according to Christopher Okada, its CEO and founder.
“We have a bunch of inquiries from two sets of people,” Okada said. “One group is basically crypto-related service companies. They don’t own or create the coin themselves, but they are somehow related either as investors or they specialize in marketing or [public relations] of [cryptocurrency companies]and work with financial institutions to create funds with cryptocurrency.
While the number of cryptocurrency companies Okada sees taking up traditional office space — as opposed to coworking — is still relatively small, crypto-related and support companies are actively taking up space, he said. -he declares.
“The people who serve the crypto industry are much broader, because it could be a fund that has a 10% focus on crypto,” he said. “This is a group from which we receive a lot of requests. We brought in a company that essentially manages NFTs [or non-fungible tokens] with crypto, so they have an NFT strategy and a cryptocurrency strategy, and they are looking for offices. There is definitely an upside there.
The most active areas for this type of rental are in the 10016 and 10010 postcodes, he added. These codes encompass much of Manhattan’s East 20 and East 30, including around Madison Square Park.
Based on Okada’s map of crypto and crypto-related businesses taking up space in Manhattan, assuming a minimum of 3,000 square feet per business, 90,000 square feet of office space were occupied by the companies listed, with the average lease seems to be 40,000 square feet.
In 2018, day-trading operations were the biggest consumer of crypto office space, Mitchell Waldman, founder of Real Estatea Manhattan-based office and retail leasing company that represents tenants, said in a blog post written at the time.
Although the cryptocurrency-related market has grown and changed, Waldman’s description of the “essential components of a crypto office” still applies, including valuing space efficiency; a preference for clean, contemporary finishes over “historic loft character”; the ideal office being accessible 24/7; a tenant-controlled HVAC system; and a high-speed, redundant, wireless fiber connection.
An example of a crypto firm taking traditional offices in Manhattan is based in San Francisco Ripple, which offers XRP, a digital asset designed for payments, as a cryptocurrency. The company occupied 6,933 square feet in January 2018 at 155 West 23rd Street, Okada said (it’s not a building his company owns).
Similarly, a crypto investment firm is looking for 30,000 square feet in Manhattan, according to Okada, who declined to name it, “because we’re trying to attract them.”
The growth of Bitcointhe best-known cryptocurrency, led to a small boom in cryptocurrency office rental by himself. In January, the Bitcoin mining company Cipher miningsigned a five-year lease to SL Green Realty Corp.‘s One Vanderbilt, in a 6,454 square foot Altus Suite, SL Green’s internal flexible office brand.
In September 2021, the Rudin management company announced that the cryptocurrency trading and mining network Apifiny signed a five-year lease on 12,022 square feet at 1675 Broadway, its 35-story office tower in Midtown. Apifiny was at 199 Water Street.
Other recent examples of cryptocurrency-related businesses taking up offices in Manhattan are blocktechwhich advertises itself as an international blockchain venture capital studio, at 55 Wall Street; crypto exchange platform Coinbasewhich after its IPO, took a 30,000 square foot sublease at 55 Hudson Yards from Mitsui Fudosan in January; and cryptocurrency data and transaction company On-chain analysiswhich also nearly doubled its space in January to 77,000 square feet at L&L Holding 114 Fifth Avenue.
When it comes to cryptocurrency companies and associated startups taking up coworking space, only big companies are really on the hunt, Okada said. Small businesses — those that may have no more than a few workers — are opting to work from home instead.
“Before the pandemic, I would say most coworkings, even if they were independent contractors looking for an office, would take up space at We work,” he said. “They don’t need that now. They might as well save the two or $3,000 a month and work from home. The micro-business market is suffering pretty badly and, where the average lease we’ve done is around 2,000 to 3,000 square feet, pre-pandemic there were a lot of 500-foot spaces, and that market is in complete pain right now.
Whether due to the pandemic or other reasons, Okada considers rents in its areas of operation to still be generally lower than pre-COVID-19 prices.
On a monthly per square foot basis, “rents have now gone from $60 to $65 to $50,” he said. “So in the Flatiron District, if they got $65, $70, we’re at $50 to $55 a square foot.”
Similarly, in Midtown South, “everyone is down 20 to 25 percent,” Okada said. “If you get $50 a foot, now you get $40 a foot.”
Okada said he believes in the world of crypto, not only from a real estate rental perspective, but also from a user perspective.
“We’re going to use crypto and we’re going to use NFTs to rent office space and transact in commercial real estate. And we will very, very soon. Crypto is definitely the future and I am basically a true believer in its future.
Philippe Russo can be contacted at [email protected].