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The upstart: Trot
Like many New Yorkers in real estate, David Menaged had plenty of free time on his hands in the early days of the pandemic. But the commercial broker didn’t spend his shut-in days baking sourdough bread. He used the lull to create an online marketplace that connects building owners directly with companies seeking short-term office space.
His model cuts the coworking industry out of the equation.
Menaged knew nothing about tech, but he is a real estate veteran. The Brooklyn College dropout, who was raised in Flatbush, got started straight out of high school, interning with a small real estate company and going on to launch his own commercial brokerage, Intrepid Real Estate Group.
“I founded it in the last awful market—2008,” he says. “So my timing really stinks! Or it’s amazing. Depends how you look at it.”
The city’s short-term, flex-space office market had long struck him as a great opportunity. JLL predicts that 30% of all office space will be “flex-leased” by 2030. But these days the market is dominated by the coworking industry, which leases large spaces at a deep discount from building owners, then subleases them to customers at a significant markup.
Menaged describes his startup, Trot, as an Airbnb or Uber for office space. Building owners list their spaces on the searchable platform for renewable, three-month terms. Tenants can take the space unfurnished or furnished. The company does not charge office owners a fee for listings, but it does charge a 10% commission on every transaction.
Trot, which launched in June, lists 166 spaces in 34 buildings, largely in Manhattan. The company's available office space currently stands at 234,648 square feet. Rates range from $950 a month for a 60-square-foot office on West 40th Street to $20,600 a month for the entire 6,000-square-foot ninth floor at 240 Madison Ave. The rates, which are set by the building owners, are typically half what one might pay at a coworking space on a square-foot basis, Menaged says.
Scott Galin, CEO and a principal at Handro Properties, was among the first to try the platform. Galin listed a number of office spaces in several buildings owned by his company, and he hopes it will prove to be an efficient way to fill selected short-term vacancies.
“Usually it takes comparable time, energy and logistics to do a short-term deal as a more traditional term of five, seven or 10 years,” he says.
Galin’s listings have received only a few bites, but that’s by design. Menaged says he’s been looking to get more locations on the site before marketing to prospective tenants, “so that when people come to the platform, there’s real choices.”
The reigning Goliath: WeWork
New York City-based WeWork offers flexible-term workspace at more than 640 locations in 34 countries, serving lone freelancers, small businesses and Fortune 500 companies. Customers looking for office leases must sign for a minimum of six months. The company’s 2021 revenue topped $2.5 billion.
How to slay the giant
Menaged hired a small team of developers last year to start building an online platform. The developers were initially funded out of his own pocket. In March 2021 he raised a cou- ple of million dollars from peers in the real estate business who share his vision.
One such investor, Abraham Kassin CEO of Kassin Sabbagh Realty, sees a lot of pitches from proptech companies.
“But this one really spoke to us,” he says. “We saw the need for something like this... It gives the landlords the ability to control their own destiny, together with the brokerage community.”
Trot’s first big challenge was to persuade often conservative landlords to try the platform. While Menaged thinks the platform will go viral one day, the company is pitching building owners one by one through Zoom presentations and in-person demos.
“The model is tremendously scalable,” he says, “but at the early stages, I think it needs to be treated like a local business.”
Menaged says he’s learned a lot in the process. Early on, he dropped the idea of providing tenant background checks—there’s too much potential liability.
“We’re the platform on which they find the space, communicate with each other and transact,” he says. “But it’s up to the parties to be comfortable with each other.”
In October, Trot radically streamlined the onboarding process for landlords. The original process, which had everyone sending DocuSign agreements back and forth, proved un- wieldy and took up to a month to complete. Landlords can now sign the agreements and list their property immediately.
Earlier in the fall, the company doubled down on its effort to work with commercial brokers to attract new business, offering to split the 10% commission 50-50. It will soon allow building owners the option of offering longer-term deals to prospective tenants.
The next challenge
Menaged launched Trot in New York City, where he has plenty of local knowhow and contacts. But now he’s planning to expand to other locations, such as Miami, Los Angeles and Austin, where he won’t enjoy those advantages.
But he’s not worried.
“Going into tech when I was a dumb real estate guy was a pretty big challenge also,” he says, “and I was up for that one!”
Anne Kadet is the creator of Café Anne, a weekly newsletter with a New York City focus.
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