It seems often enough that WeWork makes the news in commercial real estate circles in and around the Puget Sound region. Based on a recent Seattle Office Market Overview prepared by the Broderick Group, WeWork had a relatively active third quarter in Seattle. The brokerage company reported that WeWork took 73,000 square feet at the Hines-owned Fourth & Madison building in Seattle, as well as 54,336 square feet at Hudson Pacific’s Hill7 building located at 1099 Stewart Street in Seattle’s Denny Triangle neighborhood. It is this second lease for the two remaining floors of the building that provide a glimpse into what WeWork may be planning to do more in Seattle and beyond.
According to sources with knowledge of the Hill7 deal, WeWork Enterprise, a distinct operating unit at WeWork that focuses on corporate end users and touts office solutions for teams of any size, will be subleasing one of the two floors to San Francisco-based Pinterest and the other to Amazon. The enterprise group says that using WeWork will provide its corporate customers convenience—no long-term leases—as well as significant operational cost savings. WeWork says its Enterprise service should cost tenants 25 percent less than a typical office lease. The company is looking to take on administrative expenses, office amenities, cleaning & maintenance, design & construction and rent expenses for their tenants. The service, called Custom Builds, offers to make this a possibility for “a handful of offices, a floor, or even a whole building.”
According to these sources, WeWork is also in talks to take space at Onni Group’s 1411 4th Avenue building, and this deal should be closing shortly.
In Silicon Valley, WeWork Enterprise just subleased the entire available office component of The Village at San Antonio Station in Mountain View from LinkedIn. The two-building property totals just over 450,000 square feet, and WeWork is in talks with several technology companies to lease the space to them. According to the sources, Amazon and Facebook are potential tenants that may be moving to the property.
A similar deal occurred in Vancouver, BC, where WeWork took over 76,000 square feet in the city’s Bentall III property, a 492,000 square foot, 32-story building, according to a report from the Financial Post from early October of 2017. According to the report, Amazon is planning to take 147,000 square feet in a new building developed by Oxford Properties in downtown Vancouver located at 401 W. Georgia St. This would double the company’s presence in the Western Canadian city, however since that property will not be ready for a couple of years, Amazon signed a deal with WeWork for two years at Bentall III. WeWork was able to secure additional 53,000 square feet at Bentall II, another building part of the Bentall Centre, a complex of four Class A buildings located at the center of downtown Vancouver’s business district.
WeWork has made significant inroads into the corporate real estate space, and the moves in Seattle, Vancouver and Mountain View signal the company’s readiness to take on much larger opportunities and potentially disrupt the office market as we know it today. The company just raised $4.4 billion from Softbank Vision Fund, which includes other investors. That investment includes $1.4 billion earmarked to help WeWork expand throughout China, Japan and Southeast Asia, as well as $3 billion in growth funding into WeWork’s parent company, according to a report from CNBC.
This week, Hudson’s Bay, the company that owns Lord & Taylor, announced that it sold its iconic structure in New York, a 676,000-square-foot Italian Renaissance-style building for $850 million to WeWork, where the seven-year-old company will house its headquarters. About a quarter of the building will be leased back to the retailer, in an arrangement that will give WeWork more experience to explore its enterprise model.
