Having WeWork in your building could help land a large corporate lease

Posted on March 1, 2019 in Posts by Zoe Hughes

The amount of co-working space across the U.S. has grown 50 percent in the past year.

Yet despite commentary it could be a threat to the traditional office operating model, the NAREIM Acquisition & Dispositions meeting heard that having flexible space providers in your building could help landlords secure large, long-term lease agreements with corporations.

Attendees at the meeting, which took place this week, heard key statistics on co-working, including:

However, one attendee also described negotiations with a large enterprise to lease 80 percent of an office project. The potential tenant would only take the space if a flexible space provider, such as WeWork, took the remaining 20 percent.

The key driver was the large corporation’s future ability to utilize the co-working space for its own transitional needs.

Co-working was one of many topics covered during the group discussions at Acquisitions & Dispositions. Key takeaways also included:

A deep dive into Investment Committee perspectives and the acquisition process revealed a need for senior executives to “kill or nurture a deal early” by being actively involved in pipeline calls and deal reviews.

There are expected to be distinct winners and losers when it comes to real estate property types, with some highlighting multifamily as a potential winner. One attendee caveated though there was now “no room for error” in apartments.

Opportunity zone funds are likely to become an alternative to 1031s – and could mean increased competition for real estate investment managers owing to their cheaper cost of capital.

To see the presentations from the NAREIM Acquisitions & Dispositions meeting, go to the NAREIM Member Portal. For more information on NAREIM meetings, please visit the NAREIM website. Upcoming meetings include:

NAREIM Innovation Summit, April 3-4, in Chicago

Sustainability & Investment Management, April 30, Chicago

Data Strategy, May 15, Chicago

Asset & Portfolio Management, June 12, New York