WeWork Inks 200 KSF in NYC, DC Coworking Deals
- May 13, 2019
Uber’s stock market debut grabbed headlines last week, but another SoftBank-backed unicorn is making waves in the real estate world as it moves closer to an IPO. On two consecutive days, WeWork announced new deals that will see the coworking firm occupy a total of more than 200,000 square feet of office space in Washington, D.C. and Manhattan’s Rockefeller Center.
The sharing economy brand has expanded its footprint in the nation’s capital by signing a lease for 111,000 square feet across three floors of 200 Massachusetts Ave. NW, a premium office project newly developed by Property Group Partners.
The announcement came a day after WeWork said it had struck a cost- and revenue-sharing agreement with RXR Realty, in which the flexible office firm will manage four floors totaling 90,000 square feet at 75 Rockefeller Plaza in New York City.
Growing in the seat of government
WeWork’s D.C. deal involves the first of the five buildings to open within the 2.2 million-square-foot Capitol Crossing development. The property is located atop Interstate 295, just north of Capitol Hill. The 12-story, “beyond” LEED Platinum-certified building—so named because its eco-friendly attributes extend beyond the US Green Building Council’s existing categories—features waster cisterns, cogeneration power and rooftop green areas.
The American Petroleum Institute (API) moved into the 400,000-square-foot building earlier this year. The new space will be WeWork’s second-largest in Washington, D.C., where the company already has 16 locations open or underway, according to its corporate website. In a statement, WeWork said its products in D.C. are proving attractive to members in government affairs, trade associations and the lobbying scene.
JLL represented both Property Group Partners and WeWork in the lease negotiations.
Sharing economy comes to Rockefeller Center
WeWork is trying out a different model in its hometown of Manhattan. The company’s partnership with property heavyweight RXR will see the two firms share the build-out costs as well as the revenue generated by the coworking space at 75 Rockefeller Center, which RXR bought in 2012. The 33-story, Class A building is located on 51st Street between 5th and 6th avenues in 2012.
WeWork said that construction has commenced and is expected to wrap up by the third quarter of the year. The flexible office firm will lead the design and programming at the venue, and an existing WeWork enterprise member has already signed up for the entire space.
The Rockefeller Center deal comes after RXR teamed up with home-sharing behemoth Airbnb to transform 10 upper floors at 75 Rockefeller Plaza into “a new category of urban lodging” designed to blend elements of luxury hotels with apartments.
This partnership model, as contrasted with a traditional lease, is a first for WeWork in the city, but the company has already made similar revenue-sharing arrangements with landlords around the world. These include Helbor in Brazil, TH Real Estate in London, Daman Land in Malaysia and Gemdale Properties in China, where WeWork is converting and relaunching a coworking space built by the developer in Shenzhen.
The We Co. eyes IPO
WeWork owner The We Co., which has received more than $10 billion in total investment from Japan’s SoftBank Group and its Vision Fund, announced last month it had filed for an IPO with U.S. regulators. SoftBank is also the biggest shareholder in Uber, the ride-sharing giant whose initial public offering on the NYSE last week was a disappointment.
A report released by CBRE this month found that The We Co. and IWG (owner of Regus and Spaces) control roughly half of the U.S.’ flexible office inventory. Manhattan alone has 25 percent of all flexible office space nationwide. There appears to be plenty of room for the sector to grow, as flexible space accounts for only 2 percent of total office inventory across major markets in the U.S.