WeWork Says It's Manhattan's Top User of Office Space
Coworking Giant Expands in the Biggest U.S. Office Market
Coworking giant WeWork said it is now the largest private occupier of office space in New York's Manhattan borough after eight years in business, reflecting both the speed of its growth and escalating demand for shared workspaces.
WeWork said it now occupies 5.3 million square feet of office space in the country's largest office market, moving ahead of "four banking giants" after agreeing to lease 258,344 square feet at 21 Penn Plaza, which is owned by TH Real Estate. The lease took 70 percent of the building. New York-based WeWork said the deal is its largest in Manhattan this year.
The milestone follows taking top tenant posts in London earlier this year and in Washington, D.C., this summer. As for what city may be next, WeWork has big chunks of square footage in Chicago, Los Angeles and San Francisco.
JPMorgan Chase, which occupies 5.2 million square feet in Manhattan according to commercial brokerage Cushman & Wakefield, appears to have been knocked out of the top spot. JPMorgan didn't immediately respond to a request for comment.
WeWork recalled its start in 2010 at 154-156 Grand St. in SoHo, and how demand from customers early on for office space with shared amenities confirmed the company's business model.
"The overwhelming response to that space reiterated our belief that people were ready for a new approach to work and the workplace. This has been borne out over the years, with companies of all shapes and sizes becoming a part of the WeWork community, leading us to expand our presence across the city such that we are now the largest private occupier of office space in Manhattan," Granit Gjonbalaj, WeWork's chief development officer, wrote in a blog post.
The company's quest to dominate the Manhattan office market hasn't been without setbacks, however. Talks with landlord The Durst Organization to lease about 200,000 square feet of space at 1 World Trade Center fell apart this month.
WeWork said it now has office space in 50 buildings in Manhattan and another 10 that are either opening or about to across New York. Those sites hold some 50,000 members.
There is a total of 917 million square feet of office space within Manhattan, according to CoStar research. The figure leaves WeWork holding .005 percent of that office market.
WeWork also had internal growth this year, doubling and diversifying its New York workforce. It now counts 1,300 employees in design, engineering, technology, architecture, construction and real estate. The coworking giant said it began 2018 with 600 developers.
The first location in SoHo occupied 27,000 square feet as of 2011, according to CoStar data. WeWork says it now has 28,200 square feet within the building.
Citing a survey conducted in partnership with HR&A Advisors, WeWork contends its presence within office buildings achieves higher rents and helps landlords attract a wider variety of tenants. It said its presence within 450 Lexington in New York yielded landlord RXR Realty a 29 percent premium, and three of its Los Angeles locations (100 W. Broadway, 520 Broadway and 7083 Hollywood Blvd.) garnered a 15 percent rent premium.
And although about 25 percent of its 300,000 members globally are from Fortune 500 companies, WeWork said its emphasis on smaller businesses has given 18,000 such companies the ability to be in a major building they otherwise couldn’t afford.
"In major markets such as New York, Chicago and Los Angeles, we lease a total of 1.8 million square feet of space to small businesses, generating $250 million in additional revenue for landlords in these cities," Gjonbalaj wrote in June.
Globally, the company now operates 300 locations in 87 cities and 23 countries. The company’s total workforce stands at 6,000 employees.