Coworking spaces on Long Island lure tenants with coffee bars, ice baths and flexibility

Owners of coworking space on Long Island said they see high demand despite the financial failure of shared office giant WeWork Inc. and the rise of remote and hybrid work policies after the pandemic.

Coworking office landlords said several factors have helped them weather the worst of COVID's impact on commercial office space.

Flexible access to modern-looking offices that can be paid for on a daily, monthly or annual basis — and can include private, designated office space or simply access to open desks — is a major selling point for the rapidly growing number of entrepreneurs and startup businesses.  Access to a professional environment on demand has become a popular option for remote workers with young children at home, as well.

In addition, many coworking sites offer a host of snazzy amenities, including high-speed Wi-Fi, free snacks and drinks, lounges and event spaces, private lockers and mailboxes, conference rooms, and shared receptionists or secretarial services for tenants. 

Some  feature gyms or rec room-like amenities, such as Ping-Pong or pool tables. Huntington’s Main Space, which opened in December, even offers ice baths.

Occupancy remains high

Operators of coworking space on Long Island said they have seen high levels of occupancy and interest in shared office amenities since the pandemic, in part due to  the switch to remote and hybrid work.

Craig Weiss, president of T. Weiss Realty of Melville, a local developer and longtime landlord of traditional and coworking office space, said tenancy has been up for its shared office property, the Totus Business Center.

“I’m at about 90% occupancy at Totus,” said Weiss, who invested around $300,000 last year to renovate the Melville coworking property’s atrium. “We’re well-capitalized and we have the capability to make these improvements.”

While Totus lost tenants at the height of the pandemic, Weiss said many have returned and a steady stream of new clients in the years following have helped fill openings.

“The bulk of my current client base in Totus were pre-COVID clients who’ve stayed with us,” he said. For those who signed on later in 2020, “Totus served as a very flexible option at a time when there was a lot of uncertainly,” since tenants are not locked into long-term leases.

Newer operators, too, said they’ve been able to find tenants.

“We knew there would still be a need for it,” said Diana Lillo, co-founder of Moss Wellness Workspace in Garden City. “I was very much paying attention to the changes we were seeing on the side of commercial real estate.”

Moss is a coworking office marketed to wellness professionals such as mental health counselors, physical and massage therapists, and weight loss management professionals.

Lillo said she and her business partner, a former client from her full-time work designing medical office interiors, had begun talks to open a shared space for wellness-focused businesses as early as 2019, but the pandemic delayed the project by nearly a year.

“We started to put together floor plans and the concepts and the development of the project pre-COVID. And then we went on a hard stop,” she said.

And while Lillo’s coworking space wouldn’t open until 2022 due to delays, she said the growth of small businesses that popped up during and following the first year of the pandemic became a convenient target audience for Moss’ offerings.

“There were so many people who started their own thing who had a special online platform for what they provided,” she said. “But they really do need to have some physical presence.”

According to the U.S. Census Bureau, new business applications have hit record highs  since 2020, with 2023 marking the most yet, at 5.5 million new businesses created. The surge followed the Great Resignation, in which record numbers of workers quit their jobs as the pandemic led to a rethinking of priorities. 

Lillo said around 20% of Moss tenants are employees of other companies who have the option to work from home but want a professional setting, but the overall majority — around 80% — are entrepreneurs or small businesses headquartered out of the space.

Prices for space are comparable to other coworking offices, with entry level memberships starting at $225 a month for access to desks, up to full-time private offices starting at $1,500 a month.

“There’ll always be a need for this,” she said. “Businesses are thinking differently about running their businesses more efficiently and tighter.”

For Nicole L. Weingartner, a lobbyist and director of state government affairs at Davidoff Hutcher & Citron LLP in Manhattan, having a dedicated workspace has become imperative — especially considering that her law firm no longer has an office on Long Island.

Weingartner, an Astoria, Queens, resident who lobbies the state on behalf of nonprofits, said around 90% of her clients are on the Island. But shortly after the pandemic began, her employer closed  its Garden City office.

While she is allowed to work remotely, Weingartner said she often needs to be on the road visiting clients on the Island. Prior to securing a basic membership at Moss, she said she frequently had to make conference calls while on the road, or work from a parked car, a situation that wasn’t providing her the kind of environment she needed to focus on the job the way she wanted.

Weingartner said she was able to get her employer to cover the $225 monthly fee for her Moss access.  

“When we’re talking about getting nonprofits' money out of the state budget or discussing legislation where one or two words could make or break, you need to be able to focus on that,” Weingartner said.

It's possible to be productive over the phone in her car, but "it’s more conducive to be in a space like Moss," she said.

Fewer new developments

While operators of coworking spaces said they’ve been seeing high levels of interest in their offerings, real estate experts said they’ve seen fewer such developments pop up locally in recent years.

Coworking office spaces have, as a market, remained relatively stagnant since the pandemic, with coworking space accounting for roughly 2% of all office space in the top 20 markets in the United States in 2023, according to commercial brokerage Cushman & Wakefield. That percentage is largely unchanged from before the pandemic.

David Pennetta, co-president of the Commercial Industrial Brokers Society of Long Island, said prior to the pandemic, it was much more common to hear of new coworking operations or shared office offerings in development locally.

“I haven’t seen many new ones open up,” said Pennetta, an executive managing director of the Long Island office of Cushman & Wakefield.

Prior to the pandemic, Pennetta said it was common to hear of experienced or first-time developers opening coworking spaces wherever they could find suitable space at a reasonable cost, including inside the Island’s less populated malls and strip centers.

Since 2020, however, development has slowed as a smaller group of operators look to open locations in more desirable, transit-oriented spaces with walkable retail, housing and entertainment options.

Still, coworking fills a niche for small businesses that otherwise might be priced out of traditional offices.

“The coworking space gives a startup the flexibility that if they get a contract, they can instantly add 5,000 square feet if they need it,” Pennetta said. “Whereas if you signed a normal office lease you’re stuck in that lease.”

Typical office leases can run anywhere from three to 10 years.

WeWork debacle

Real estate experts also say the financial turmoil surrounding the fall of coworking giant WeWork Inc. has likely had a chilling effect on big investments in the shared office market.

Founded in 2010, WeWork, once one of the most valuable startups in the world at its height with a peak valuation of $47 billion in 2019, filed for Chapter 11 bankruptcy in November.  

In 2019, WeWork filed for an IPO, but filings showed heavy losses in 2018 and the first half of 2019. That same year, co-founder Adam Neumann stepped down from his position as chief executive amid pressure from investors and allegations of self-dealing.   

Even amid broader market shifts, coworking spaces have remained a strong business model for some Island operators.

Key Space, a local owner of three coworking locations in Cedarhurst and Woodmere, entered the shared office business in late 2020 when it purchased YouOffice, a coworking business previously owned by Miami-based real estate developer Equishares.

Early in the pandemic, occupancy across locations fell to around 20%, before rebounding in the summer of 2020 to 50%, Key Space management said. But as early as that fall, tenants began funneling in, most of them startups or sole proprietors. 

“They’re building a business and something like this works really well for them,” said Ben Edell, community manager for Key Space, which is currently working on a fourth space in Cedarhurst, the landlord’s first ground-up coworking construction project.

“The demand for space is pretty high,” Edell said. “We’re basically full. I think we have a couple spaces that are open now.”

Mike Hartofilis, owner of Main Space, a co-working space built in a former church in Huntington, said he originally planned to use the space primarily for his software company, Howl.com, a social media messaging app for communities.

The building, with its white steeple visible at 453 W. Main St., once served as a Christian Science church.  Initially, Hartofilis said the town determined the property couldn’t be converted into office space. After a year of petitioning the town and receiving a zoning exemption, he began work on renovating the space.

But as they outfitted it, Hartofilis said it made sense to open the building as both his company’s headquarters and a rentable coworking space.

Opened in December, Hartofilis said the 100-seat shared office is about 50% full. The company is still discovering the best combination of offerings to help fill the remaining space, he said.  He recently began marketing the offices to parents as potential study and tutoring spaces for their children. 

“We’re still feeling it out,” he said. Hartofilis said he hopes to open the space as a venue for networking events and is considering converting some of the shared conference rooms into private offices.

“We have larger privacy pods that could probably accommodate an office,” he said. “But prior to building everything out we’re still getting a sense of demand for it.”

Frank Soler, chief executive of White Horse Capital, who rents private office space  at Main Space, said having a dedicated office for his growing real estate investment consultancy is good for both clients and colleagues. 

“To me there’s nothing like the collaboration that takes place in person,” said Soler, who started the firm three years ago out of his basement with longtime friends. Speaking with families or organizations about important investment decisions is always better handled in person than through platforms like Zoom, he said.

Additionally, as a small business with a total of four employees including himself, Soler said it’s hard to anticipate the growth of the business. Committing to a long-term lease at a traditional office could lock them into a space they might quickly outgrow, he said.

“For us, coworking was very logical because we’re in growth mode,” Soler said. “We don’t know how much square footage or people we’re going to need in the next 12 to 36 months.

“It’s the perfect balance of space cost and flexibility,” he said.