WeWork Takes New York City

Mr. Black said that he began investigating off-market opportunities to see if he could find a fit. When he found 175 Varick, he quickly knew the location was promising. Working with the building’s agents, a team from the real estate firm Colliers International led by company executives Martin Meyer, Eric Meyer, Richard Plehn and Seth Hecht, Mr. Black helped negotiate and devise a plan to convert the building’s freight entrance into a new lobby that WeWorks could use as a private, dedicated entrance.

With that accommodation, Mr. Black and the Colliers team reached a deal to have WeWork take several floors in the building­—three, four, five and eight—each of which is about 15,000 square feet for rent in the $30s-per-square-foot range. Not all of the floors are immediately available and WeWork will take possession of the floors over the next year as they become vacant. New York State tenants, for instance, occupy a portion of the space; the Council on the Arts has offices on floors two and three; and the New York State Lottery occupies the fifth floor.

“The structure works for us because we build most of the space out ourselves with our own crew of builders,” Mr. Neuman said. “Getting it step-by-step allows us to focus on one portion at a time and build it out to the high standards that we have.”

WeWorks will be installing a 4,000-square-foot lounge in its new lobby, a space where tenants can get food and coffee and mingle with guests or each other.

“The lounge area immediately sets the kind of tone for the atmosphere WeWorks provides and getting that was a key part of the deal,” Mr. Black said. “It shows how communal and creative the space is.”

WeWorks will also receive outside signage that will allow the company to stamp its brand on the building.
Mr. Black had an ace up his sleeve through the negotiations, which helped him not only get WeWorks into the property but hammer out such a favorable deal as well. Extell Development, it turns out, had been eager to do a large deal because it was interested in selling its leasehold on the property. The cash flow that WeWorks will provide is bound to make the building a more compelling acquisition to potential buyers. Sure enough, in the weeks after the lease was signed, the owner has put the property on the market using a sales team from Jones Lang LaSalle.

“I try to do my due diligence in any leasing assignment and we had quietly heard that Extell was hoping to do a lease,” Mr. Black said. “You look for every advantage that you can for your tenant.”
dgeiger@observer.com