WeWork Cos said it surpassed JPMorgan, the biggest U.S. bank, as the largest tenant of Manhattan office space, a milestone highlighting growing demand for flexible leases.
WeWork, a provider of co-work spaces with flexible leases that now has more than 50 locations in Manhattan, said in a blog post on Monday it signed a lease for 258,344 square feet at 21 Penn Plaza. The move makes it the largest private occupier of office space on the island with more than 5.3 million square feet.
JPMorgan, the largest U.S. bank by assets, has 5.2 million square feet, according to brokerage Cushman & Wakefield.
Flexible space accounted for 12 per cent of Manhattan leasing activity in the first six months of the year, according to brokerage CBRE, and WeWork was responsible for about half of that as companies in search of extra space embrace coworking. Flex space providers sign long-term leases with a landlord and then rent the leased space to clients on a short-term basis.
Coworking’s appeal has become more mainstream across the United States, not just in New York. Mall operator Macerich Co in August announced a partnership with Industrious to roll out flexible workspaces in its portfolio of high-end U.S. shopping centers.
WeWork’s torrid growth has not gone unnoticed. Brookfield, one of the world’s largest property owners, plans on offering flexible space in most of the 1,000 office buildings it owns globally.
“Anybody that’s not thinking about it now and not doing it risks being road kill,” said Kevin Danehey, global head of corporate development at Brookfield Properties.
“From an owner’s perspective, this isn’t something where we’re just seeing this as a trend but as something that’s core to how we’re viewing the operation of our assets,” he told a Rethink conference about the future of the office two weeks ago.