WeWork’s Top 10 Landlords
- Aug 02, 2019
Since it began taking up space for its coworking business, WeWork has been the talk of the commercial real estate industry. Its heavy spending has raised concerns that it is a volatile business model, especially in the face of a potential downturn—and the numbers speak for themselves. Last year, the company’s revenue doubled, but so did its losses. What’s more, Japanese bank SoftBank curbed its investment in the company from $16 billion to $2 billion.
When it announced its initial public offering filing in January, the $47 billion coworking company was already poised to be a new standard for the rapidly changing and expanding flexible office sector. Now that it approaches its IPO—scheduled for September—it’s slowly becoming the marquee company in one of the fastest growing real estate subsectors.
WeWork opened its first location in Manhattan’s SoHo neighborhood in February 2011. Throughout the years, it went beyond the traditional model of shared workspaces, largely targeting Millennial-fueled start-ups, acting to enable entrepreneurs in an effort to cater to entities other than large corporations. Today, those companies have begun realizing the advantage that theWeWork’s amenity-rich office spaces provides in terms of flexibility. As a result, major enterprises such as IBM, Microsoft and Facebook are now among the company’s clients. At the beginning of 2019, the company rebranded itself as the We Co. in order to reflect its massive expansion, at the same time taking a step further towards global consolidation and recognition.
Financial statements from the Financial Accounting Standards Board drew attention to WeWork’s $34 billion in lease obligations at the end of 2018—an amount that exceeds many tech unicorns’ costs and nearly double the 2017 number of $18 billion. According to Yardi Matrix data, WeWork’s national footprint encompasses some 24.3 million square feet.
The table below displays the top 10 property owners in terms of total square footage leased to WeWork in the U.S. Data was provided by Yardi Matrix, which tracks office leases in 86 major metros. The total leased square footage for each company includes completed properties, as well as projects under construction. The table reflects leasing data as of July 31.
10. RXR Realty
Last May, WeWork signed its first revenue-sharing agreement in New York with RXR Realty. The decision fell on the heels of the company leasing 362,387 square feet from the local investor, which was the We Company’s second-biggest landlord in Manhattan as of July. As part of the above agreement, WeWork will manage 90,000 square feet of office space at 75 Rockefeller Plaza.
The latest lease deal, signed last July, includes 212,387 square feet at RXR Realty’s 620 Avenue of the Americas. The 700,000-square-foot historic landmark is situated in Chelsea and formerly housed Spotify and Mediaocean.
9. Cohen Brothers Realty
The strategy behind Cohen Brothers Realty and WeWork’s deals seems to break down to smaller, yet well spread-out leases. The shared office space provider occupied 399,120 square feet of the landlord’s space across seven locations in Manhattan and West Hollywood, Calif., as far back as July.
At $79.93 per square foot, the Manhattan properties commanded some of the highest asking prices—and WeWork has shown it is willing to pay top dollar for a significant presence. Consequently, between June 2016 and January 2018, it increased its footprint at 135 E. 57th St. from 60,000 to 126,520 square feet, ending up with nine floors at the property.
8. Tishman Speyer
It’s no secret WeWork has been taking large bites of the Big Apple. With a 7 million-square-foot Manhattan footprint, the coworking behemoth has been changing the real estate landscape, picking up new leases left and right. As of July, Tishman Speyer, which recently launched its own coworking platform, leased 399,631 square feet to the flexible space operator.
The companies have been inking deals since November 2011, and it was only this year that they went beyond Manhattan’s borders. Tishman Speyer will soon add WeWork to the tenant roster of The Jacx, a 1.2 million-square-foot development in Queens. The coworking company took up 215,000 square feet in the building that’s scheduled for completion at the end of August.
7. Martin Selig Real Estate
The We Company and the Seattle developer’s first cooperation dates back to 2017 when Martin Selig Real Estate broke ground on the first Seattle WeLive community (the company’s co-living brand). The two entities have worked together for two years, resulting in leases totaling 421,572 square feet as of July, all of them in yet-to-be-completed developments.
6. Merlone Geier Partners
Where there’s a thriving tech scene, there’s a strong coworking footprint. In the case of Merlone Geier Partners and WeWork, it’s an all-or-nothing situation. WeWork leased 456,760 square feet from the San Francisco-based investor—comprising approximately 55 percent of its portfolio—which emerged as its top Bay Area landlord as of July. The second biggest landlord falls way behind, leasing only 85,000 square feet to the coworking operator.
WeWork took over The Village at San Antonio Center, a recently completed, two-building property in Mountain View, Calif., in September 2018. The transit-oriented, mixed-use complex includes offices, a hotel, a movie theater and restaurants, all within walking distance of the San Antonio Caltrain station.
5. Boston Properties
Starting with 2015, the coworking company and Boston Properties inked four deals totaling 465,401 square feet. The two real estate giants have much more in common than just a stable landlord-tenant relationship—they are both tech-driven and chose to invest in management software for commercial real estate.
Despite their long-term partnership, it took some time until the Boston-based landlord warmed up to the idea of welcoming WeWork to one of its New York City assets. The flexible space provider lined up to occupy 220,000 square feet, or nearly a third, of Boston Properties’ up-and-coming Dock 72 building, located within the emerging Brooklyn Navy Yard mega-development.
4. Onni Group
Vancouver-based Onni Group leased 470,928 square feet to the flexible office space provider as of July. The deals span over five locations in Washington and California. Starting off with a 56,295-square-foot location in Manhattan Beach, Calif., the size of the Onni Group-WeWork leases increased gradually, culminating with a 158,000-square-foot deal, effective January 2020.
Onni Group acquired the 1.1 million-square-foot Wilshire Courtyard office complex last June. Shortly after, the coworking space provider made the property its first Wilshire Corridor location.
3. Ivanhoe Cambridge
There’s a solid relationship between the Canada-based investor and the shared office space provider. The 517,712 square feet in lease deals in two buildings, as well as a strategic partnership to acquire and develop real estate properties globally, stand as a testimony to it.
Ivanhoe Cambridge signed two Denver leases totaling 147,942 square feet with WeWork in August and October 2018. The company went back for seconds in Manhattan as well. In 2015, WeWork signed a deal to occupy 292,956 square feet at 85 Broad St., in the borough’s Financial District. Three years later, a 76,814-square-foot expansion followed, which made Ivanhoe Cambridge WeWork’s largest landlord in Manhattan as of July.
2. Nuveen Real Estate
The company’s relationship with WeWork dates back to 2015 when the space operator opened its third Seattle location. In 2018, three new leases in Boston and New York City followed. As of July, Nuveen Real Estate’s deals with WeWork include 583,576 square feet across five locations, all in tech-propelled markets.
While the Seattle locations barely top the 50,000-square-foot mark, WeWork became daring in Manhattan with a 258,344-square-foot lease. Following what was one of the metro’s largest coworking deals, the company became the anchor tenant of 21 Penn Plaza, occupying 10 full floors of the 16-story building.
1. Beacon Capital Partners
Beacon Capital Partners inked its first deal with the coworking powerhouse in March 2017. Since then, WeWork’s national deal with the Boston-based investor has quickly ballooned, resulting in a total of 669,809 square feet across 10 locations. Most of them are situated in the costliest U.S. markets, such as the Bay Area, Manhattan and Chicago, a recent Liberty Games study shows.
The leases range in size between 37,000 and 122,350 square feet. In July 2018, WeWork took up the entire 14th floor at 515 N. State St., a Class A asset in the Chicago Loop. The deal was second only to the flexible space provider’s largest office deal in the Windy City, which spans 140,000 square feet at the up-and-coming 167 Green St.