There have been a lot of questions surrounding the future of office space. Many companies plan to allow more of their employees to work remotely in the future, either permanently or in a hybrid model. Because of that, there's some concern that office demand and rental rates will fall in the future. That would impact large real estate investment trusts (REITs) focused on the office sector.
However, while some legacy office tenants are reducing their space requirements, new ones are emerging. Bitcoin (BTC 2.75%) mining companies are one of those tenant types that's starting to secure more office space. This trend recently benefited office REIT SL Green Realty (SLG 4.64%).
Bitcoin mining in the Big Apple
SL Green Realty is the largest office landlord in Manhattan. The office REIT has interests in 73 buildings with 34.9 million square feet of space. One of its crown jewels is the recently completed One Vanderbilt development. The company spent more than $3 billion to build the 1.7 million square foot office building that stands over 1,400 feet tall.
Demand for space in One Vanderbilt has been strong. Last month, the REIT reported it had leased 95.2% of the space after signing two more leases. One of those leases was with Bitcoin mining company Cipher Mining, which signed a five-year lease covering a 6,454 square foot Altus Suite, a high-quality, fully furnished turn-key-ready space for tenants looking for smaller space solutions.
While a small lease overall, it put SL Green one step closer to completing its leasing for its latest skyline-defining skyscraper. It also shows that the office REIT can attract new tenant types to its office buildings.
Bitcoin's move to the office
SL Green is the latest office landlord to benefit from the Bitcoin boom. Last year, leading Bitcoin miner Bit Digital (BTBT 4.83%) leased office space at WeWork's (WE 4.45%) 429 Lenox Ave in Miami Beach. It was Bit Digital's second U.S. location outside its headquarters in New York City. The company chose Miami because Mayor Francis Suarez wants to expand the use of Bitcoin in the city. He recently took one of his paychecks 100% in Bitcoin, a move followed shortly by Eric Adams, New York City's new mayor. Adams' support for the cryptocurrency could further benefit New York City-focused office REITs like SL Green.
And cities aren't the only ones paying in Bitcoin nowadays. WeWork has been accepting cryptocurrency as payment for rent since last April when crypto-exchange Coinbase (COIN 5.09%) started paying its membership in crypto. Meanwhile, UK-based digital bank Revolut recently said it would pay for its WeWork office space in Dallas with Bitcoin. That office is its largest in the U.S., with more than 300 employees. Revolut is WeWork's first enterprise member to start paying in cryptocurrency.
WeWork is one of a growing number of landlords that are accepting Bitcoin and other cryptocurrencies for rent. That's enabling them to appeal to a broader potential tenant base and positioning them for future lease expansion opportunities as these emerging companies expand.
Bitcoin is providing the office sector with a boost
Cryptocurrencies like Bitcoin are becoming mainstream in more ways than one. Companies operating in the sector are starting to lease office space as their operations grow. Meanwhile, other office tenants are starting to use crypto to pay their rents. That is benefiting forward-thinking office landlords, enabling them to lease more office space when so many other industries plan to use less space as more of their employees work remotely.