Most people still identify WeWork as a company that famously popularized shared workspace, but based on some of its recent activities, the firm is moving toward becoming a global landlord and property management firm. In a recent leasing transaction in San Francisco, WeWork is squarely positioning itself in this direction; it leased the entire Union Bank Building at 430 California Street in San Francisco, or roughly 250,000 square feet of the 22-story building. WeWork has leased the building for an 18-year term and is scheduled to move into the building in the first quarter of 2019.
The news was first reported by the San Francisco Chronicle, which stated that the company is looking to transform the property, a 1960s brutalist tower, to a contemporary and amenity-rich property for which WeWork is known.
The property is owned by a joint venture of Kennedy Wilson and Takenaka Corp., which paid $135 million for the building and the 27,000 square foot, 1908 adjoining Greco-Roman structure next door in December of 2016. It was sold at that time by Union Bank, which acquired it as part of its merger with Bank of California in 1996. At the time of the sale in 2016, the tower was 92 percent leased and the offer from Union Bank was for a four-year sale/leaseback with plans to make the property vacant within 36 months of the purchase.
This is not WeWork’s first such lease, although it may be the first one in San Francisco. In October of 2017, The Registry reported that WeWork Enterprise subleased the entire available office component of The Village at San Antonio Station in Mountain View from LinkedIn. The two-building property totals just over 450,000 square feet.
WeWork Enterprise is a distinct operating unit at WeWork that focuses on corporate end users and touts office solutions for teams of any size. The company says that using WeWork will provide its corporate customers convenience—no long-term leases, although recent reports are seeing WeWork working toward multi-year agreement with corporate tenants—as well as significant operational cost savings. WeWork says its Enterprise service should cost tenants 25 percent less than a typical office lease. The company is looking to take on administrative expenses, office amenities, cleaning & maintenance, design & construction and rent expenses for their tenants. The service, called Custom Builds, offers to make this a possibility for “a handful of offices, a floor, or even a whole building.”
A similar deal occurred in Vancouver, BC, where WeWork took over 76,000 square feet in the city’s Bentall III property, a 492,000 square foot, 32-story building, according to a report from the Financial Post from early October of 2017. According to the report, Amazon is planning to take 147,000 square feet in a new building developed by Oxford Properties in downtown Vancouver located at 401 W. Georgia St. This would double the company’s presence in the Western Canadian city, however since that property will not be ready for a couple of years, Amazon signed a deal with WeWork for two years at Bentall III. WeWork was able to secure additional 53,000 square feet at Bentall II, another building part of the Bentall Centre, a complex of four Class A buildings located at the center of downtown Vancouver’s business district.
According to Chinese-based Mingtiandi, WeWork also leased four floors in Swire Properties’ Taikoo Shing on Hong Kong island earlier this month. This was followed by a November 2017 takeover of an entire Class A office building in downtown Shanghai in the China Overseas International Center near Xintiandi.