Yes, everybody’s worried about WeWork’s problems and how they might rock the commercial leasing scene. Realty Check noted back on Sept. 2 that industry players were “sweating it out” as the company readied its since-aborted IPO.
After all, WeWork, owned by We Co., is not only the city’s largest tenant with over five million square feet, but — as its main business is subleasing all that space to other companies — one of its largest landlords.
And, yes, WeWork has been in unreported talks with some owners to take even more space — including, for example, at SJP Properties’ 470 Park Ave. So. A bigger question mark might hang over the former Lord & Taylor building, which WeWork owns but has yet to lease to a tenant.
Talks with Amazon for 800,000 square feet there, which we first reported in July, haven’t led to a deal.
“An empty, landmarked building on Fifth Avenue is not the signal they want to send to investors as they ready their IPO,” an insider told us at the time.
But, speculation that the situation threatens the market’s overall health seem overblown. For one thing, most landlords who leased to WeWork were aware of the risks and took steps not to be over-exposed. Most leases included no free or discounted rents, for example.
What’s more, a Manhattan market with a tolerable 10.5% availability rate (according to Cushman & Wakefield) could withstand any WeWork fallout. One powerful industry insider said, “Even if they vanished off the face of the earth it wouldn’t have significant impact on a market of 450 million square feet.”