WeWork Does 44,000 s/f Deal At 261 Madison
WeWork, a fast growing office suite company, has signed a roughly 44,000-square-foot deal to open a location at 261 Madison Avenue sources say.
The company has been rapidly expanding in the city over the past two years, most recently signing a 75,000-square-foot lease at 175 Varick Street last November.
WeWork leases space, then partitions the floors, giving smaller organizations and businesses the opportunity to operate in a full fledged office environment with amenities such as reception, a conference room and other traditional office infrastructure.
The firm operates a number of locations in the city, but the deals at 261 Madison Avenue and 175 Varick mark the first in which it will operate within a larger building. At other branches in Manhattan, such as 1 Little West 12th Street in the Meatpacking District and 349 Fifth Avenue in Midtown, the company is the sole occupant in the properties it leases.
Landlords in the city have sometimes been hesitant to do deals with office suite companies because they can invite a rapidly revolving tenancy into a building, what some owners consider a security concern.
WeWork deftly negotiated that issue with its transaction at 175 Varick Street, a building in Hudson Square. The company, through its leasing representative Sean Black, an executive at the services firm Jone Lang LaSalle, arranged to establish its own entrance at the property complete with a cafe and meeting area in the lobby that will serve as an amenity for tenants. Mr. Black, a star dealmaker at JLL who has done several prominent leases in recent months, represented WeWork in the transaction at 261 Madison Avenue.
It’s not clear if a private entryway is part of the deal at 261 Madison Avenue. The over 300,000-square-foot building is owned by the Sapir Organization and has struggled with lingering vacancies. Last year, Sapir hired a high powered brokerage team from Cushman & Wakefield led by Bruce Mosler to take over dealmaking at the property and another building owned by Sapir across the street 260 Madison Avenue.
The office suite business has appeared to be a lucrative industry as more start up companies have been launched as the economy has rebounded and employees laid off during the recession have regrouped by forming their own enterprises.
“I don’t look at us as in the real estate business,” WeWork’s founder and chief executive Adam Neuman told The Commercial Observer in a conversation last year. “We feel we’re building a physical social network, a new type of ecosystem. 30 percent of our tenants end up doing business with each other.”