As WeWork continues to shape the face of office leasing, its recent push into real estate investment is prompting a rebuke from landlords and other industry insiders.
“A lot of people originally thought of the shared office-space providers as bringing tenants,” Tony Malkin, CEO of Empire State Realty Trust, told Bloomberg. “But I think now we’ve seen — particularly with WeWork and other providers’ expansion into the enterprise solution — that it’s really much more about disrupting the relationship of tenants to landlords, of tenants to brokers, of brokers to landlords.”
Other real estate firms, while serving WeWork as a client, have also backed rival firms. Brookfield Property Partners has invested in Convene, a flexible meet-up space provider, and Blackstone Group has brought in Industrious to some of its buildings. And some brokers are reportedly concerned that WeWork is cutting them out of deals.
But WeWork continues to grow at break-neck speed, reportedly adding up to 1 million square feet a month to its global leasing inventory and is now valued at more than $40 billion, as SoftBank continues to pour money into the company.
“By participating in virtually all the elements of the real estate food chain, WeWork will find themselves in deeply competitive situations with others,” Cedrik Lachance, director of research on real estate investment trusts at Green Street Advisors, told Bloomberg.
In November, The Real Deal reported that WeWork had launched an investment fund called ARK, to be lead by former New York REIT head Wendy Silverstein. With the fund it planned to purchase its first ground-up development at a massive 4.4-acre site in Austin, called Waller Creek.
The new investment fund followed the company’s foray into real estate purchasing with the launch of WeWork Property Advisors last year. With that fund, it agreed to buy the Lord & Taylor building in Manhattan for $850 million in October 2017, but it has yet to secure funding for the deal. Elsewhere, the company bought a Washington D.C. office building with a local partner for $137 million. [Bloomberg] —David JeansRecommend0 recommendationsPublished in