Miami’s office market continues to be dependent on coworking firms to fill their spaces, but some landlords are concerned that their absorption rate is becoming too much.
WeWork expands revenue sharing program in Asia
Since launching and expanding its Asian operations to 123 centers across nine countries, WeWork has announced a new partnership with landlords.
Evan Kleinberg, managing director and head of real estate at WeWork Asia, said that the company is looking to partner with landlords and developers at a “portfolio level” to co-operate with building owners, rather than renting portions of the spaces, then sublease to end-users.
This new cooperation model is dependent upon the partnerships and “participating leases,” which give landlords a revenue-sharing arrangement, rather than acting as an independent provider within the building.
Building owners will also inject capital to create a facility to be operated by a joint venture in return for receiving a portion of the income.
WeWork’s first implementation of the partnership strategy in Asia started with Kuala Lumpur-based developer Daman Land. The company has plans of setting up a new office at the Equatorial Plaza in the first quarter of 2019.
“WeWork prioritizes its focus on delivering the best experience, while the developer can focus on their strengths to build the hardware,” Kleinberg said. “Together we can align our interests to grow in a smarter way.”
The revenue sharing partnerships promise to offer developers “a one-stop solution” that provides commercial space, houses corporations, manages facilities and creates programming for workplace communities.
With landlords, the company says its expertise in design, project management, and marketing saves building owners time and money.
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Currently, the coworking operator has signed revenue-sharing agreements with global supply chain manager Fung Group and Sino-Ocean Group, a Beijing-based developer.
For Sino-Ocean, WeWork is providing design, digital tools, and brand power to build their portfolio.
“Before we entered a participating lease with SOG, we already operated in three of their buildings,” said Kleinberg. “We then built on that trust and agreed on a framework that would allow WeWork to identify buildings across SOG’s portfolio.”
WeWork used its Powered by We program with Fung Group, which aided the 112-year-old Hong Kong firm to upgrade its headquarters, which was redesigned and now operates as a WeWork-branded center. Now, the operator provides its marketing resources to bring in new tenants and shares leasing revenue with Fung Group.
Jonathan Wright, director of flexible workspace services for Asia at Colliers International, says that revenue sharing between office operators and landlords is not a new strategy, with IWG using many variations of the model for years.
Wright believes that the flexible office market is changing and taking new measures to develop a more collaborative partnership between landlords and coworking space operators.
An HR & A Advisors study found that WeWork can help produce 29% in rental premiums for landlords. Their ability in making large buildings accessible to small companies also generated an additional $200 million in rent for landlords in New York City.
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