WeWork recently launched a new initiative to go after mid-sized tenants, and on Wednesday the co-working company shared an update on its progress.
The company said it has signed leases for six spaces in Manhattan that it plans to use for the new product, dubbed “HQ by WeWork”: at490 Broadway, 149 Fifth Avenue, 115 East 23rd Street, 38 West 21st Street, 8 West 40th Street and 13-15 West 27th Street.
A WeWork spokesperson said the company has agreed to lease 440,000 square feet of space for HQ by WeWork and is in “final stage negotiations” for another 550,000 square feet.
These new spaces can be smaller than traditional WeWork locations, and will be marketed primarily to companies with 11 to 250 employees who want to lease an entire floor.
“We didn’t use to take floors that have 5,000, 6,000-square-foot plates,” the company’s chief growth officer David Fano said during a presentation to journalists Wednesday. WeWork will still take care of things like WiFi, coffee machines and key cards, but there won’t be any full-time WeWork employees or perks like fruit water. Tenants will also get their own entrance and more leeway to design their space, and pay less than for a traditional WeWork space. The company said it expects a minimum commitment of 12 months.
Dan Reich, whose software startup Troops recently leased a 5,000-square-foot floor at 149 Fifth Avenue, said his office space doesn’t show the WeWork brand anywhere — a stark contrast with the co-working company’s typical spaces.
Michael Hershfield is heading the initiative and the company’s EVP of global real estate Arash Gohari is in charge of finding locations.
WeWork’s new “service-lite” offering is similar to Knotel’s business model. New York-based Knotel, founded in 2016, has grown to more than 1 million square feet of office space across New York, Berlin, San Francisco and London and recently raised $70 million in venture funding. It has appealed to companies who don’t need all the services of a traditional WeWork and want spaces with a lighter design touch. Last year, WeWork briefly offered tenants at Knotel and other flexible office companies a year free rent if they switched over.
The Real Deal recently broke down WeWork’s plans to appeal to more mid-sized tenants, which include leasing brokerage services.