Adam Neumann, co-founder and CEO, WeWork/ file photo courtesy of WeWork
NEW YORK CITY—WeWork continues to expand on both coasts. They recently secured six new locations for their HQ by WeWork program. Four of the leases totaling close to 110,000 square feet are in New York. The flexible office space provider also signed onto two more spaces in San Francisco comprising more than 55,000 square feet.
This program, which focuses on mid-sized offices, launched in July and is aiming to lease one million square feet by this summer.
“We continue to see exceptional demand for HQ by WeWork with each of our current locations having opened at 100% occupancy,” says chief real estate development officer Granit Gjonbalaj. “The addition of these six locations, comprising over 165,000 square feet in total, will allow us to serve the long line of companies wanting to be a part of our community.”
This demand seems unaffected by the recent Wall Street Journal article which noted some investors raised conflict of interest concerns that CEO Adam Neumann owned properties in New York and California, where WeWork is a tenant.
The CEO's ownership issues have not been a part of the latest announced leases. In New York City, the new locations include the following:
At 49 West 27th St., WeWork is leasing 41,200 square feet across the mezzanine, second through fourth and eighth floors. The landlord is Chestnut Holdings and brokers were Eric Cagner and Bernie Weitzman from Newmark Knight Frank. WeWork expects to open this location in the summer of 2019.
The flexible office space provider is occupying 28,500 square feet at 185 Madison Ave. taking up the fourth, fifth, seventh, 10th and 12th floors. The landlord is Hilson Management Corp. and Andrew Zang from Savills Studley provided broker representation. The location will be available to WeWork members in Q1 2019.
At 546 Fifth Ave., WeWork is taking up 20,270 square feet across the fourth and 14th floors. The landlord is Safra National Bank and brokers were Reeves Henritze and Neil King from CBRE. This building will be open to the company's members in the summer of 2019.
Across 19,500 square feet at 29 W. 30th St., WeWork members will be using space across the fourth, seventh and eighth floors of the building, starting in Q1 2019. The landlord is the Kash Group and Colliers International's Christel Engel brokered the deal.
In San Francisco, WeWork will be in another two buildings.
Taking up 47,673 square feet at 340 Bryant St., the co-working members will be using the second through fourth floors, starting this summer. The landlord is Pollock Financial Group and CBRE's Bruce Wilson negotiated the lease.
At 731 Sansome St., WeWork is renting 8,396 square feet on the third floor of the building. The landlord is Irving Rabin and broker is Jennifer Essner from Newmark Knight Frank. The company expects to open this location in Q1 2019.
Although again the recent leases are not part of any investor concerns, WeWork has not shied away from the press, in general—alerting the media of its latest deals on Jan. 16, 2019, the same day of the WSJ article. Early in the morning, the paper reported on how Neumann has made millions of dollars by leasing to WeWork multiple properties which he owns. The article stated, “Multiple investors of the privately held company said the arrangement concerned them as a potential conflict of interest in which the CEO could benefit on rents or other terms with the company.”
The WSJ also reported that the WeWork board had previously stopped a deal in 2013, when Neumann tried to buy a 5% interest in 210-220 North Green St. in Chicago. It was a location where WeWork was negotiating a lease. The newspaper stated, “Citing a conflict of interest, the company's board blocked the move, and WeWork instead paid for the stake.”
If this acquisition was blocked, why would the principle not apply to other properties owned by Neumann?
A WeWork spokesperson provided GlobeSt.com the following statement: “We have a comprehensive review process in place for related party transactions. Those transactions are reviewed and approved by the board—and are fully disclosed to investors.”
As WeWork is the largest private office tenant in New York City, multiple law firms contacted by GlobeSt.com declined to comment on the issue. They cited their own conflicts of interest.
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Betsy Kim
Betsy Kim was the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
