- WeWork has hired JLL and CBRE to market large availabilities it has in New York City and Los Angeles, respectively.
- The flexible-workspace giant said it is now embracing the brokerage industry and plans to hire firms to help it fill millions of square feet in major cities across the country.
- Leasing office space has become more difficult as the coronavirus pandemic continues to stall deals and tenants remain uncertain when most employees will return to the workplace.
- WeWork’s decision to tap major brokerages is a turnabout from its past strategy of leasing space on its own.
- Visit Business Insider’s homepage for more stories.
Faced with large vacancies in its sprawling portfolio of office space across the country, WeWork has turned to major commercial real-estate brokerage companies to help it fill millions of square feet of space.
The move to hire outside firms to address its vacancies is a turnabout for the flexible-workspace company that comes as the coronavirus crisis has battered the country’s office market, stalling leasing activity and clouding the questions of when and how tenants will return to the workplace.
In the latest sign of uncertainty for the office sector, Google, on Monday, revealed it will not ask its 200,000 employees to return to the workplace until midway through next year.
In New York City, the flexible-workspace company’s largest market with almost 9 million square feet, WeWork has enlisted the real-estate services firm JLL to market and lease big openings, including spaces at the office buildings 620 Avenue of the Americas, 437 Madison Avenue, 199 Water Street, and other locations.
It has tapped CBRE to lease another list of available spaces in Los Angeles, and a top sales executive at WeWork said it is planning to hire major brokerage firms to deal with other vacancies in its portfolio.
“As we went through the beginning of the year, Sandeep talked through what WeWork was going to look like in the coming years and what became apparent was that our relationship with these large brokerages was something we wanted to lean into,” Nick Worswick, WeWork’s chief sales officer, told Business Insider, referring to WeWork’s chief executive Sandeep Mathrani.
It’s common practice for large landlords in cities across the country to hire real estate services firms to handle the process of marketing and negotiating leases for major office availabilities. WeWork, however, had largely eschewed that practice, seeking to leverage its brand, suite of amenities, and huge portfolio to draw in tenants and strike deals on its own.
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“There’s no question the supply is increasing and there’s no question that demand is slowing down, but in places like New York City, there’s always tenants in the market,” said Peter Riguardi, the Tri-state area president and chairman of JLL, who is leading a brokerage team from the company that is assisting WeWork with several availabilities in the city.
JLL was hired to help WeWork fill:
- 620 Avenue of the Americas, where it has over 200,000 square feet available in January.
- 437 Madison Avenue, where it has 360,000 square feet available in January.
- 199 Water Street, where it has been advertising roughly 66,000 square feet.
- 368 Ninth Avenue, where WeWork has nearly 260,000 square feet.
- 205 Hudson Street, where WeWork occupies nearly 100,000 square feet.
- 500 7th Avenue, where WeWork has 250,000 square feet.
- 980 Sixth Avenue, where WeWork has about 75,000 square feet.
A WeWork spokeswoman said the company will hire one or more brokerage firms to help it with at least 4 other locations in New York that it has not yet specified.
In Los Angeles WeWork hired CBRE to market:
- 700 and 750 N. San Vicente Boulevard.
- 811 W. 7th Street.
- 1031 S. Broadway.
- 5750 Wilshire Courtyard.
According to a real-estate brokerage executive familiar with WeWork’s leasing plans, it is shopping for brokerage firms to help it lease space in other markets as well, including Boston, Seattle, and Miami.
“We have worked with brokerage firms selectively in the past, but we have never done it at this scale,” Worswick said. “Part of the reason we’re doing more of it is we have more space than we did prior.”
As Business Insider previously reported, WeWork has recently been advertising almost 2 million square feet of vacancy in its New York portfolio, more than 20% of the space. That availability rate, which factors in present and pending availability, far outstrips the 12.1% rate across Manhattan, according to recent CBRE data.
Worswick said that just as Covid had dealt a blow to the country’s office market, it could give a boost to flexible-office space providers. Among the reasons he gave was that tenants would seek out the fluid terms that WeWork offers rather than commit to long term leases as they remain uncertain about the post-Covid workplace and economy.
“If you look at the 10 year lease market, almost any company that was about to sign since March didn’t,” Worswick said. “There’s a need to preserve optionality so you can make smart decisions about where your people are going to go during and after Covid and we think we’re uniquely positioned to provide that.”
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