DATA: THE SKYSCRAPER CENTER
PINTEREST, BASED IN CALIFORNIA, RENTS WEWORK SPACE IN NEW YORK
was still depressed. The company found favorable rents by seeking out smallish, older buildings in difficult locations. The local real estate industry took notice. “As soon as you walked into the space, you felt the energy and excitement and you immediately understood what they had created,” says New York developer William Rudin. After a Wall Street building the Rudin family owns was damaged by Hurricane Sandy, he leased it in 2013 to WeWork, which is refurbishing it. Rudin said he thought “it would be an interesting way to generate excitement and buzz” for the entire neighborhood, where he owns other properties. Around the same time, WeWork caught the attention Miguel McKelvey, an architect who designed retail spaces of Benchmark, one of Silicon Valley’s top venture firms. When for American Apparel, proposed a co-working concept to Dunlevie first heard about the company from a colleague, he their building’s owner, who might charitably be described as was skeptical. “We’re not interested in the re-marketing of an old-fashioned Brooklyn landlord. (His company’s history office space,” he says. But he flew to New York and took a long includes bruising battles with tenants and a mysterious fire.) walk with Neumann, visiting four WeWorks. “We were strug“He would tell me, ‘You know nothing about real estate,’” gling for vocabulary then to describe what we would today Neumann said. “I would tell him, ‘Well, you know nothing. call a reorganization and an atomization of the workforce,” Your building is empty.’” Dunlevie says. He thought about Maslow’s hierarchy of human They all ended up founding a company needs. WeWork was providing not just shelter, called Green Desk, which opened in 2008, but emotional necessities like companionship STACKED UP just when the economy crashed. As jobs vanand motivation. WEWORK’S ished, professionals were turning to freelancNeumann says he puts a lot of thought into TOTAL SQUARE FOOTAGE WOULD “floor psychology.” Everywhere you look at ing. “The worse the economy was heading, the RESULT IN A more interest we were getting,” Neumann says. WeWork, there are slogans. “Never Settle Ever” TOWER 30% BIGGER THAN THE EMPIRE Green Desk has since expanded to seven locais lit up in neon; flat-screen monitors flash quotes STATE BUILDING tions in Brooklyn and Queens, but Neumann from Thomas Edison and Vince Lombardi. Even WEWORK and McKelvey wanted to build their own brand. the bathroom mouthwash dispenser urges, “Pitch 3M FT2 They sold their stake and opened the first a Fresh Idea.” EMPIRE STATE WeWork in SoHo in 2010. WeWork’s own offices are now bustling with BUILDING WeWork was just one of many co-working dealmaking activity. In New York alone, it’s signed a 2.25M FT2 spaces cropping up at the time, but it went dozen large leases over the past two years, accordafter a different demographic than the estabing to the commercial real estate analysis firm lished providers of shared office space. CompStak. Other deals are in the works, fueled Although companies such as Regus do rent to by investments from backers such as JPMorgan tech startups, they mostly cater to more straitChase, Goldman Sachs, and the developer Mort laced professions such as accounting, as well as Zuckerman. (Zuckerman has also placed WeWork large corporations that want a branch office in in a San Francisco development.) The company Washington, Wichita, or Shanghai. They offer is now leasing entire buildings. “They have been a quiet, sober environment, minimizing their expanding like crazy,” says Noam Shahar, Compown branding so the space appears to belong Stak’s research director. “We can’t even keep up to their clients. “We don’t scream ‘Regus’ in with the pace.” your face,” says Steve Farley, Regus’s chief WeWork’s binge has made some potential landexecutive officer for North America. “We want your cus- lords skittish, as has Neumann’s brash, name-dropping style. tomers to think you’re there for the long term.” WeWork, Those with long memories recall that after the 2000 dot-com by contrast, proudly proclaims itself in big letters out in crash, countless startups went bust, and office space providfront of its spaces, which have the loft-style layout that ers similar to WeWork were stuck holding long-term leases. appeals to young creative types. The U.S. branch of Regus, which had a large footprint in Silicon WeWork entered the New York market at an oppor- Valley, filed for bankruptcy in 2003, though the company has tune moment, when the economy was beginning to since recovered. It takes time to lease and renovate buildrecover, but hiring—and thus the price of office space— ings, which means that WeWork is assuming fixed long-term
51