Coworking powerhouse WeWork has signed a long-term lease for about 236,000 square feet of space at 1440 Broadway, a 25-story, 747,000-square-foot office building owned by CIM Group at Broadway and 40th Street in Manhattan.
In exchange for taking about one-third of the building, WeWork will get a noteworthy amenity: a newly constructed private entrance and lobby on 41st Street with dedicated elevator access to its space on floors 14 through 21.
“Given the exceptional demand we’re seeing from companies wanting to be based around Bryant Park, we have continued to expand our presence in the area. Today, we have over ten locations within a 10-minute cab ride from the park, and 1440 Broadway will be among the largest of these,” said Granit Gjonbalaj, chief real estate development officer at WeWork, in prepared remarks.
CIM acquired 1440 Broadway in December 2017 and is undergoing a capital improvement plan at the building that includes renovation of the existing 40th Street entrance and lobby and creation of a new roof deck, which will offer views of Bryant Park, Times Square and the Hudson River. The upgrades are expected to be completed in the first quarter of 2019.
CIM’s purchase of the building from New York REIT for $520 million was one of the largest in NYC’s office sector that month.
This generation’s teleworking
“Coworking space has surprised nearly everyone. The proliferation of shared office space has been impressive. Its current pace of expansion is unsustainable, though. At some point, even without the test of a recession, this sector will reach a saturation point, spurring some retrenchment,” said Joe Genovesi, executive managing director of Savills Studley, in the company’s second quarter New York City office sector report.
Although shared office space is booming — and having a more lasting effect on the office market than teleworking did — the report predicted that, despite some expectations, it won’t hit 30 percent of the overall office market. Similarly, Savills Studley observed, the services offered by providers such as WeWork, Knotel, Industrious and Innovate can’t be as tailored to a tenant’s needs as the tenant’s own internal services would be.
All told, Savills Studley suggests that coworking space could reach 8 million square feet, or about 2 percent of existing NYC office stock, by the end of 2018. Coworking providers have been especially active in absorbing commodity space on lower floors, the report said.