Cryptocurrency Companies Taking More Manhattan Office Space
Big-time landlords like SL Green and Rudin Management find tenants eager for efficient spaces and plenty of bandwidth
As cryptocurrency and related businesses continue to grow and intersect with industries like real estate and proptech, they have also begun to occupy more office space in Manhattan from Midtown to Downtown.
Okada & Company, a family-owned real estate advisory and investment firm located in Midtown South, represents 40 buildings in that submarket and in Midtown, primarily in the Union Square, Flatiron, Chelsea, Herald Square and Times Square areas, according to Christopher Okada, its CEO and founder.
“We have a bunch of inquiries from two groups of people,” Okada said. “One group is basically crypto-related servicing companies. They themselves do not own or create the coin, but they are somehow related either as investors, or they specialize in the marketing of 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 traditional — as opposed to coworking — office space is still relatively few, the crypto-related and support firms are actively taking space, he said.
“The people that service the crypto industry are a lot more broad, because it could be a fund that has 10 percent of their focus on crypto,” he said. “That’s one group that we have a lot of inquiries from. We’ve had a company come to us that basically handles NFTs [or non-fungible tokens] along with crypto, so they have an NFT strategy and a cryptocurrency strategy, and they’re looking for office space. There’s definitely an uptick in it.”
The most active areas for such leasing are in ZIP codes 10016 and 10010, he added. Those codes encompass much of Manhattan’s East 20s and East 30s, including around Madison Square Park.
Based on Okada’s expertise regarding crypto and crypto-related companies taking space in Manhattan, if one assumes a minimum of 3,000 square feet per company, 90,000 square feet of office space has been taken up by the firms.
In 2018, day-trading operations were the largest consumer of crypto office space, Mitchell Waldman, founder of Cogent Realty, a Manhattan-based commercial 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 “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 and wireless fiber connection.
One example of a crypto firm taking traditional office space in Manhattan is San Francisco-based Ripple, which offers XRP, a digital asset built for payments, as its cryptocurrency. The company occupied 6,933 square feet in January 2018 at 155 West 23rd Street, Okada said (it’s not a building his firm owns).
Similarly, a crypto investment company is seeking 30,000 square feet in Manhattan, according to Okada, who declined to name it, “because we’re trying to lure them in.”
The growth of Bitcoin, the most well-known cryptocurrency, led to a small boom in cryptocurrency office leasing by itself. In January, Bitcoin mining company Cipher Mining, signed a five-year lease at SL Green Realty Corp.’s One Vanderbilt, in a 6,454-square-foot Altus Suite, SL Green’s in-house flex office brand.
In September 2021, the Rudin Management Company announced that cryptocurrency trading and mining network Apifiny signed a five-year, 12,022-square-foot lease at 1675 Broadway, its 35-story office tower in Midtown. Apifiny had been at 199 Water Street.
Other recent examples of cryptocurrency-related companies taking office space in Manhattan are Blocktech, which bills itself as an international blockchain venture studio, at 55 Wall Street; crypto-exchange platform Coinbase, which following its initial public offering took a 30,000-square-foot sublease at Mitsui Fudosan’s 55 Hudson Yards in January; and cryptocurrency data and transaction company Chainalysis, which also in January nearly doubled its space to 77,000 square feet at L&L Holding, Columbia Property Trust and Allianz’s 114 Fifth Avenue.
When it comes to cryptocurrency companies and related startups taking coworking space, only the larger firms are really in the hunt, Okada said. Smaller companies — those with maybe no more than a few workers — just opt for work from home instead.
“Before the pandemic, I would say most coworking people, even if they’re a solopreneur looking for a desk, would take space at WeWork,” he said. “They don’t need that right now. They might as well save the two or $3,000 a month and work at home. The market for microstartup companies is suffering pretty significantly, and, where the average lease that we’ve done is around 2,000 to 3,000 square feet, pre-pandemic there were a lot of spaces that were 500 feet. That market is completely suffering right now.”
Whether as a result of the pandemic or other reasons, Okada sees rents in his areas of operation as still generally down from pre-COVID-19 pricing.
On a monthly per-square-foot basis “rents are now down from $60 to $65 to low $50s,” he said. “So in the Flatiron District, if they were getting $65, $70, we’re at $50 to $55 per square foot.”
Similarly in Midtown South, “everyone’s down 20 to 25 percent,” Okada said. “If you are getting $50 a foot, you’re now getting $40 a foot.”
Okada said he is a believer in the crypto world not only from a real estate leasing perspective, but from a user one, as well.
“We are going to be using crypto and we are going to be using NFTs to rent office space and to transact in commercial real estate. And we’re doing that very, very soon. Crypto is definitely the future and essentially I’m a true believer in the future of it.”
Update: This article was updated to reflect the full ownership of 114 Fifth.
Philip Russo can be reached at email@example.com.