Believe it or not, WeWork is only in its seventh year of operations. In April 2011, WeWork opened its first doors in SoHo, New York. According to a Business Insider article, by 2015 WeWork had 54 coworking spaces in NY, Boston, Philadelphia, Washington DC, Miami, Chicago, Austin, Berkeley, San Francisco, LA, Portland, and Seattle. Today, that number has more than tripled and there are 186 current WeWork locations across the country. (Not to mention several other international locations.)
30% of WeWork’s current US locations are in New York City across the boroughs of Manhattan, Brooklyn, and Queens, and another 26% are located in top US cities including San Francisco (12 locations), Seattle (11 locations), Boston-Cambridge (10 locations), and Chicago (8 locations).
For those unfamiliar with WeWork, it is a global network of co-working spaces. WeWork leases most of its properties and offers them back in smaller sizes and on shorter terms to its members. The idea started with a single vacant building in NYC. Founders, Miguel McKelvey and Adam Neumann, convinced their then office building’s landlord to lease a floor to them. And after a Craigslist ad posting and a simple sign on the building, the duo attracted a range of creative members who all needed flexible, small, and affordable work spaces. Film makers, tech start-ups, architects, and even lawyers became the first few members of WeWork.
WeWork prides itself on serving the needs of the “We Generation”, the millennial workforce who “demands more from their work than just a job”. According to Adam Neumann, co-founder of WeWork, millennial workers “value experiences over material goods, crave a sense of community and fulfillment, and want to be part of something greater than themselves”. As cities and towns across the country continue to vie for this talented, young segment of the workforce, many have started to think about filling vacant properties with WeWork as their next tenant. After all, that is exactly what WeWork is – an office tenant.
Through a quick survey of the 186 current US locations, I found that WeWork does tend to skew mixed-use environments with great accessibility (whether highways or public transit lines), proximity to anchor institutions (educational, medical, financial), large companies, and convention centers. However, traditional downtowns and central business districts aren’t the only types of locations that WeWork prefers.
Cities, pay attention.
I found that when WeWork spaces aren’t located on a main street or downtown commercial corridor, they’re almost always located in mixed-use shopping malls that have recently been built or remodeled to include a variety of uses beyond just retail. It’s therefore unsurprising that Simon Property Group, one of the biggest Real Estate Investment Trusts in the country, is also WeWork’s biggest lessor.
Take this example of The Shops at Clearfork in Fort Worth, TX. Owned by Simon Property Group, the mall is located just off the I-20 (which loops the city) and the Chisolm Trail Parkway (that runs directly to Downtown Fort Worth where the Fort Worth Convention Center and several large medical institutions are located). It is an upscale, mixed-use development featuring a mix of retail, entertainment, residences, and offices with direct access to the Trinity Trail park system. All of the right amenities that millennial WeWork members are looking for. In fact, this walkable, mixed-use mall environment is anchored not only by Neiman Marcus but also an AMC Theater and City Works Eatery and Pour House.
Other REITs and major property owners that are riding the waves of change in retail and that are having to diversify their retail portfolio with mixed-use developments, including GGP, Endeavor Real Estate Group, Shop Companies, Westfield, are also starting to partner with WeWork. For mall owners, it makes total sense to fill large vacant spaces with a new, trendy office tenant that provides retailers with a captive daytime worker population.
A recent survey by WeWork in NYC, LA, and Chicago found that 70-80% of members in those cities did not work in the neighborhood prior to joining WeWork therefore indicating additional activity and spending at local restaurants and shops.
As WeWork continues to expand its reach across the country, particularly beyond the two coasts (and it is! new locations have been announced for Phoenix, Salt Lake City, and Kansas City), cities in the midwest and the south should think about working more strategically with Class B and C mall owners to attract WeWork – or any other coworking company – to mall redevelopment projects. Given their wide-ranging membership base, WeWork could be a great anchor tenant and catalyst for economic revitalization in cities. Today, WeWork members come from across all industries and not only include small start-up businesses but also large, mature companies like Microsoft and IBM.
To find out more about regulatory and financing incentives that cities can use to encourage walkable, mixed-use mall redevelopment projects, sign up for the next issue of the American Planning Association’s Economic Development Division’s ‘News and Views’ newsletter in September.