Not All Building Owners Think WeWork Is A Good Deal

WeWork continues to gobble up space in metro Denver, making it the largest user of office space in town, but not all building owners welcome the coworking behemoth with open arms.

WeWork has leased large blocks of space in a number of high-profile downtown buildings, including seven floors in Tabor Center at 16th and Lawrence streets; five floors in Wells Fargo Center, also known as the cash register building, at 1700 Lincoln St.; and two floors in the Triangle Building at 1500 Wewatta St.

All told, WeWork has leased 628K SF, making it the largest user of office space in Denver.

There is about 1.9M SF of flexible office space across 103 locations in metro Denver, according to research on coworking CBRE published in November. Flexible space represents 1.7% of the total office market. Coworking space is concentrated in downtown Denver and RiNo, both submarkets that thrive on the live-work-play atmosphere. The top industries leasing coworking space are creative companies, business services and technology businesses.

Prime West Chief Operating Officer Jim Neenan, a panelist at Bisnow’s Office of the Future event April 11, said there is a place for coworking offices in metro Denver, but he is wary of putting giants like WeWork into his projects.

“If they overwhelm a building, tenants feel swallowed up,” Neenan said. “But if they’re dispersed, it becomes an amenity — not just for the tenants in the building but for others nearby.”

Prime West’s One Belleview Station is 100% leased, and the company is in the process of building another 15-story, 380K SF building that is already half leased to Newmont Mining Corp. Neenan said he would consider leasing to a coworking company.

“I think it would be a good use for a portion of the building,” Neenan said. “It gives major tenants a lot of flexibility in terms of size and overflow space. They can float up and down on shorter-term leases.”

While Zeppelin Development does not have coworking space in any of its office buildings yet, company President Kyle Zeppelin, another panelist at the Bisnow event, said he is working with a company that provides shared space exclusively for women in the public relations, graphic design and copywriting fields.

“For us to make sense out of doing coworking, it’s much more targeted, so we’re collaborating with more local operators,” Zeppelin said. “Our approach to coworking is being very selective about it. We let brokers know that we’re not doing master leases with WeWork.”

Zeppelin said a number of tenants that occupy his buildings have come out of large coworking spaces like WeWork.

“They’ll go into a WeWork space and test the market and have time to settle on which neighborhood they want to be in,” he said. “But once companies gain a foothold in Denver, they’re not going to want to pay the WeWork markup.”

Hear more about coworking space at Denver Office of the Future April 11 at the Four Seasons Hotel Denver.