By Jack Stubbs
WeWork has been active on the Eastside over the past few months as it looks to further its reach in the ever-expanding Puget Sound region. And the company that once popularized the trends around co-working and the shared office space has plans to expand its footprint in Bellevue. According to an industry source with knowledge of the transaction, the company is close to signing a lease for almost 119,000 square feet across four floors in Bellevue’s Summitt II Tower, or just under half of a 290,674 square foot building in Bellevue’s Central Business District.
A representative from WeWork declined to comment on the details of the lease transaction. Broderick Group, who is leasing the space, also declined to comment on the transaction.
WeWork would occupy floors 8 through 12 of The Hines-owned Summitt II Building in Bellevue, which is located at 10885 NE 4th Street. According to the property listing on Broderick Group’s web site, the average rental rate in the Class A building is between $36 and $38 per rentable square foot per year, and there are currently 118,556 square feet currently available for rent.
The Summitt II Building is part of a larger two-tower complex totaling 524,130 square feet and the site also includes an adjacent site that is entitled for development. According to Downtown Bellevue Association’s web site, Hines Global REIT plans to bring a third 17-story, 370,000 square foot commercial tower—Summit III—to life that will also include below-grade parking.
WeWork’s other properties in Bellevue include Bellevue Place, located at 800 Bellevue Way NE, and Lincoln Square, which is located at 10400 NE 4th St. WeWork announced its plans to open its location in the 80,000 square foot Lincoln Square building in October 2016.
Along with its impending lease in the Summit II Building, WeWork has been active on the Eastside over the last few months. According to a second quarter 2018 Eastside Office Market Report written by Broderick Group, one of the notable Eastside transactions was WeWork’s lease in the second quarter of 32,228 square feet in the Bellevue Place Corner Building.
Across Lake Washington in Seattle, WeWork also continued expanding its footprint throughout this year with a number of leases, according to the company’s second quarter 2018 Seattle office market report. Some of these included the 115,000 square foot lease in the 1201 Third building in downtown Seattle; a 15,700 square foot lease expansion in the 500 Yale building in South Lake Union; an 80,000 square foot lease in the 1600 7th Avenue building. In a smaller lease earlier this year, WeWork leased the entire seven-story, 61,000 square foot Watershed Building in Seattle’s Fremont neighborhood.
Another large-scale statement of intent was a 103,000 square foot lease—signed in first quarter 2018—in the Metropolitan Park East building in downtown Seattle. The Metropolitan Park Tower property was in the news late last week. On August 19th, Boston-based Beacon Capital Partners paid $434.8 million, or approximately $613 per square foot, to acquire the 20-story Metropolitan Park East Building and 18-story Metropolitan Park West Buildings from CBRE Global Investors.
The 2018 Seattle office market report also highlights how growth continues to be driven by large tech users. Google, Facebook and WeWork currently represent a combined 1.3 million square feet, with forecasted construction to roughly double their existing footprint and bringing them to almost 2.6 million total square feet in the Seattle area.
WeWork has been expanding its reach in the region in other ways as well over the last few months. In June 2018, the ever-expanding landlord, co-working space incubator and property management firm released its revised WeWork Broker Partnership Program, which attempts to define the rules of engagement with the commercial brokerage industry.
However, all has not been smooth sailing for the ever-expanding company in recent weeks. On August 9th, the company announced that it had raised another $1 billion in funding from Softbank Group Corp., according to a statement by the Wall Street Journal. The New York-based company said its losses in the first half of 2018 more than tripled to $723 million since the middle of 2017 as it accelerates opening new spaces and spends increasingly more to market them.