New step up for WeWork
Booming co-working operator moves into Salesforce Tower
WeWork has opened offices in San Francisco’s Salesforce Tower — another milestone for a young company that is now the city’s fourthlargest office tenant.
The three-story space in the city’s tallest building isn’t just rented out to clients; it will house a major cluster of WeWork employees, and will share headquarters status with New York, where the company was founded in 2010.
In less than a decade, WeWork has become the world’s largest operator of co-working space. It has transformed real estate around the world by building out shared offices and renting them out to both single-person startups and major companies like Facebook and Bank of America.
WeWork says it now has 1.43 million square feet leased and owned in San Francisco, behind only Salesforce, Wells Fargo and Uber, according to brokerage data. WeWork has almost twice as much space in San Francisco as it did at the end of last year, and also has offices in Berkeley, Emeryville, Mill Valley, Mountain View, Oakland, San Mateo and San Jose.
WeWork arrived in San Francisco in 2011 with a small deal in a century-old six-story building at 156 Second St., just a few blocks from Salesforce Tower.
“The original roots of WeWork in San Francisco are a
much more old-school building,” said Jon Slavet, WeWork managing director of U.S. and Canada West. Salesforce Tower “is a bridge to the future of the city,” he said.
The Salesforce Tower location will have around 700 desks, with half occupied by WeWork staff, including an engineering team that will work on building technology systems.
The other half will be co-working space, which is sold out despite having one of the most expensive rates in the world. A single desk is $800 per month and a private office starts at $1,400 per month, according to WeWork’s website.
WeWork will open a fitness club, called Rise by We, along with a coffee shop in the space in the next few months. The company also plans to hold a communal meal each week for co-working customers and employees. WeWork is also planning to host nonprofits in the space, as it does in other locations.
Slavet said WeWork is competitively priced compared with traditional long-term leases.
“Our business is full speed ahead. We continue to have recordbreaking months for new members globally,” Slavet said.
Last month, the Japanese conglomerate Softbank agreed to invest $3 billion in WeWork, valuing the privately held company at $45 billion — making it the second most valuable U.S. startup behind Uber, according to the Wall Street Journal.
Real estate experts say WeWork and other co-working operators will suffer if a recession hits, and recent stock market volatility has made investors nervous. Many of WeWork’s deals have been signed as office rents have set records in the Bay Area.
“The economic downturn is the biggest risk,” said Colin Yasukochi, research director at brokerage CBRE in San Francisco. “There is going to be less demand for office space. How much it affects the different users and owners of real estate — that’s something that’s difficult to ascertain.”
But premier buildings like Salesforce Tower have advantages during recessions, he said.
“The highest-quality locations and assets tend to perform better during an economic downtown,” said Yasukochi.
Slavet said WeWork is well positioned because it’s offering shortterm deals and working with larger businesses.
“In the midst of a correction, what do companies want? Flexibility. We offer that,” he said.