WeWork seeks second B.C. site after Amazon deal
New York-based WeWork Inc. has secured a deal with Amazon.com Inc. to rent most of the shared workspace provider’s first Vancouver office, forcing it to find a second location in the city as it continues its aggressive push into Canada.
The Financial Post has learned that the key to WeWork’s latest move into the Vancouver market was a decision by Seattle-based Amazon Inc. that it wants immediate access into British Columbia’s largest city and does not want to wait until its new space, being constructed by Oxford Properties Inc., is completed. Sources say the WeWork lease is for two years.
“Amazon wants the Oxford building, but it won’t be ready until 2019 at the earliest,” said Ross Moore, senior vice-president of Cresa Vancouver. “They are just hiring people left, right and centre. Amazon went to WeWork and said, ‘We know you have 76,000 square feet and can we have all of it?’ ”
Amazon put out a call this month for cities to bid on what it’s calling a second headquarters, or HQ2, where it plans to invest up to US$5 billion. But there is no indication that the current leasing activity is related.
Like dozens of cities, Vancouver says it is interested in the HQ2 opportunity with Mayor Gregor Robertson saying he is partnering with the Vancouver Economic Commission on a bid.
In the interim, industry sources indicate that Amazon has a deal to take 147,000 square feet in a new building planned by Oxford, a subsidiary of the Ontario Municipal Employees Retirement System, in downtown Vancouver at 401 W. Georgia St., which would double its size in the city. Amazon is also finalizing details on 112,000 square feet of space in Toronto’s Scotia Plaza.
Neither Oxford officials nor Amazon would comment on plans for the Vancouver property, which is expected to be finished in 2019. Cresa’s Moore said that Amazon wanted people on the ground immediately so it turned to WeWork.
After launching initially in Montreal about 18 months ago, the privately held WeWork, estimated to be worth US$20 billion, is now aggressively pursuing plans to expand in both Toronto and Vancouver. The company recently opened a new location last month at 240 Richmond St., near Toronto’s financial district, which was 100 per cent occupied at launch.
There are plans to open another Toronto building at Bloor and Yonge streets at the intersection of the city’s two major subway lines.
Based on its website, the only official location WeWork has in Vancouver is what it calls Burrard Station. Private offices in that space start at $860 per month and dedicated desks starts are $600 per square foot.
Moore said Amazon wanted all of Burrard Station, part of the four-building complex known as the Bentall Centre. The 76,000 square feet are located in Bentall III, a 492,000-square-foot, 32-storey building.
The problem for WeWork is it didn’t want Amazon as its only tenant in the space — part of its model is to facilitate interactions between businesses — so it gave the company about 80 per cent of Burrard Station and began looking for another location.
The company was able to negotiate another 53,000 square feet in Bentall II, an announcement that has not yet been made public. WeWork officials would not comment.
Bart Corbett, senior vice-president of office leasing with Cushman & Wakefield, has been representing WeWork and he says the company is ready to make its expansion plans more well known. He wouldn’t comment on who took the lease in Bentall III or Burrard Station, but he did confirm that WeWork has just leased five-anda-half storeys in Bentall II.
“They are now the largest tenant in the Bentall Centre complex,” Corbett said.
Vancouver’s office market has been getting tighter, with Cushman reporting in its third-quarter report that the vacancy rate in the city’s downtown core had dropped to five per cent from 6.5 per cent a year ago.
“WeWork has relationships with clients throughout North America
They are just hiring people left, right and centre. Amazon went to WeWork and said, ‘We know you have 76,000 square feet and can we have all of it?’
and when Vancouver was identified as a location, a number of enterprise clients put their hand up and said we want in,” said Corbett.
“It’s not just that Vancouver is hot, it’s just that there is a lack office space or an ability to get more than two floors in the city. There might be two, three four opportunities in downtown Vancouver right now if you want more than two floors in A class.”