The Crypto Bros Are Snapping Up Manhattan Real Estate

The Crypto Bros Are Snapping Up Manhattan Real Estate

Mike Fraietta, the founder of EmpireDAO, recently opened a co-working space for crypto entrepreneurs in a graffiti-covered building in Lower Manhattan. The cryptocurrency market has been in a meltdown. Digital currencies, along with other blockchain-based properties, have plunged in value, lending credence to skeptics who have regarded the crypto phenomenon as a fad.

But crypto companies appear to be here to stay in New York, at least for the foreseeable future, judging from the way they have been leasing Manhattan office space.

It would seem contradictory that businesses known for decentralization and digital assets are even interested in real-world space. Remote work is common at many web3 companies, which includes cryptocurrencies and platforms for nonfungible tokens, or NFTs. And companies are reconsidering the role of the office after the success of work-from-home efforts during the pandemic and the subsequent embrace of hybrid schedules.

But for the last couple of years, cryptocurrency firms have been setting up or expanding offices in New York, often in edgier, somewhat peripheral locations, as opposed to marquee parts of Midtown Manhattan.

This month, Solana Labs, a cryptocurrency platform, signed a lease for 20,000 square feet across four floors of a new office building in the Bowery. A few blocks away, EmpireDAO, whose name incorporates the acronym for “decentralized autonomous organization, ” has opened a co-working space for crypto entrepreneurs in a graffiti-covered building.

Manhattan office availability rates hit 19 percent in May, up from about 12 percent before the pandemic, according to Newmark, a real estate firm, and landlords have welcomed the new category of companies, many of them having secured recent rounds of fund-raising. The EmpireDAO co-working space. Cryptocurrency firms have been leasing space in New York, often in edgier locations. But it is unclear how the turbulence in the market will affect the longevity of some web3 companies. And the flurry of real estate activity is unlikely to make a dent in the vacancy problem because there are so few of these companies and they tend to take short-term leases for modest amounts of space, industry experts say.

“It’s still a small tenant in the scheme of things,” said Phil Ryan, director of U.S. office research for the real estate firm JLL. Read More on the World of Cryptocurrencies

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Crypto and related companies are believed to occupy less than a million square feet of an estimated 4.4 billion square feet of office space in the United States. The numbers have grown quickly, though.

“We’ve gone from essentially no companies focused on this in 2015 to about 835,000 square feet now,” Mr. Ryan said, adding that leasing has jumped 68 percent since 2020.

Most web3 companies have gravitated to three locations in the United States: Silicon Valley, the tech hotbed where many companies get their start; New York, a growing tech hub and longtime financial center; and Miami, whose mayor, like New York’s Eric Adams, has cheered on the sector by accepting his paycheck in cryptocurrency .

In upstate New York, data centers devoted to crypto mining — the energy-guzzling process of verifying digital transactions — have sprung up. These operations have faced pushback from environmental groups and public officials because the sites use electricity from power plants that burn fossil fuels, threatening the state’s effort to lower greenhouse gas emissions. The outcry has prompted the State Assembly to pass a bill that would place a moratorium on certain crypto mining operations.

In Manhattan, the cryptocurrency action is mostly centered on office space. Savills, a real estate brokerage firm, counts leases of more than 5,000 square feet for 30 notable blockchain companies around the borough, but an unknown number of firms occupy less space.

“Companies are putting their toe in the water, establishing a physical presence and feeling out what having an office brings to the company,” said Zev Holzman, an executive managing director of Savills. The amount of office space leased by cryptocurrency companies is still relatively small […]

source The Crypto Bros Are Snapping Up Manhattan Real Estate

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