WeWork in Manhattan

CoStar Market Insights: If WeWork Can Make It Here, It Can Make It Anywhere

WeWork closed on a bond issuance that raised $702 million and increased the company's cash-on-hand to $3 billion this week.

But the high price of the debt, which carries a 7.875 percent interest rate, and facts surrounding the capital raised, are causing some in the financial market to question WeWork's business model.

WeWork began operations in 2010 in a single SoHo building. Since then, the company has signed roughly 3 million square feet across Manhattan. In fact, over the past eight years, WeWork has leased more commercial space than any other Manhattan tenant, with an average rental rate of $60 per square foot.

WeWork’s latest bond offering revealed insights into the rapidly-growing company. With 234 locations, it can be inferred around 15 percent of their locations are in Manhattan. The bond offering mentions in New York the average proportion of tenant improvements funded by landlords increased from 42 percent in 2015 to 76 percent in 2017.

Many New York landlords welcome WeWork’s build-out due to its elaborate finishes. However, those finishes do not come without a cost. WeWork stated its net capital expenditure, per desk last year, was $5,631.

This latest bond offering and the $4.4 Billion raised from SoftBank is expected to further fuel WeWork’s expansion in Manhattan and the surrounding boroughs.

For instance, in February 2018, WeWork moved into almost 107,000 square feet at 750 Lexington Ave., and in 2019 WeWork will move into 250,000 square feet at Tishman Speyer’s new JACX building in Long Island City. Although these were headline deals, the average WeWork lease in Manhattan is a more-modest 58,000 square feet.

As of their latest capital raise, WeWork is valued more than Manhattan landlords SL Green and Vornado, although it could be argued that the companies have different business models.

One thing is for certain: The startup has a significant impact on the Manhattan real estate market.


CoStar Market Insights provides a snapshot of recent real estate trends. The CoStar Market Analytics team monitors commercial and multifamily real estate across 390 metro areas, with a granular understanding of the projects, players and economic trends that move these markets.

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