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WeWork’s Soho And Flatiron Leases Could Be In Trouble

A new report from real estate advisory firm Ackman Ziff has found that WeWork’s Soho and Flatiron deals could be in big trouble if the company’s coworking rates drop. Click To Tweet

The firm’s lease obligations are 2% below market rate in Soho and 4% below in Flatiron. The company’s average rent in Manhattan is $58.91 per square foot, which is 20% below the average rate. Currently, it leases 1.3 million square feet in the Financial District, which is about 16% below market rate.

According to Ackman Ziff, contractual rent increases for WeWork leases over the next five years will amount to a growth rate of 6.3%.

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“Even though they are the largest office tenant in the city, it still, percentage-wise, is a small footprint relative to the larger market,” said Marion Jones, Managing Director at Ackman Ziff. 

Despite this, WeWork and Regus have leased 8.7 million square feet of space in the city since 2017, making up 53% of New York’s absorption rate. 

Jason Meister, co-author of the report, said that some of the city’s landlords will certainly struggle if they walk away from these WeWork commitments, creating vacancy pressures in those buildings and submarkets.

ABOUT Aayat Ali
Aayat Ali

Aayat is an editor for the Daily Digest based out of Kentucky. She has worked with local coworking spaces since August of 2017 and enjoys taking her firsthand knowledge to write about the fascinating, constantly evolving world of flexible workspaces. Feel free to reach out to her at [email protected] View all posts by Aayat Ali

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