WeWork Grabs 37K SF In Warming Peninsula Office Submarket
The tumultous lead-up to The We Company's IPO isn't stopping it from signing on to more space in the coworking-saturated Bay Area.
WeWork has signed a lease for 37K SF at 1840 Gateway Drive in San Mateo, a 69K SF Class-A office building owned and recently renovated by Monday Properties.
It is now WeWork's second outpost in the mid-Peninsula city. Last year, the coworking giant leased 96K SF at Hines' 400 Concar Drive in San Mateo, just a couple of miles away from its newest location. WeWork declined to comment.
Monday Properties, a New York City-based investor and developer, purchased the four-story building for $25M in 2017, according to property records. Since then, they renovated it, including a redone lobby and new fitness center, taking it from 80% vacant in 2017 to 100% leased now, according to Monday Properties Investment Manager Brendon Lydon.
WeWork has 27 Bay Area locations with its newest lease, according to its website. On floors three and four, the coworking company joins eight other tenants, including cloud company Vlocity and on-demand gas-pumping service Booster Fuels.
"They've done a tremendous job creating an environment that catches the attention of both individuals starting a business and also larger corporate tenants," Lydon told Bisnow. "I think they're a good partnership for our building and adding visibility to our asset."
Monday Properties began on spec renovations of the bottom two floors and found success attracting tech companies before moving on to the other half of the building, according to Cushman & Wakefield Executive Managing Director Mike Moran, who was on the team representing Monday Properties.
He said Monday avoided the longer lease-up period that would have accompanied building multiple units on spec, instead doing one build-to-suit for WeWork.
"All along we were hoping and looking for a larger tenant that could take at least a full floor and, frankly, someone who could take both," Moran said. "We decided WeWork was a company we wanted to move forward with."
San Mateo had an average asking rent for Class-A office space of $61.32 per SF in Q2, slightly less than the county average of $65.40 per SF, according to data from Cushman & Wakefield.
Moran, Executive Director Clarke Funkhouser and Senior Associate Chase Novak represented Monday Properties for Cushman & Wakefield. Jonathan Moeller, Anthony Gatti and Evan Chang of CBRE represented WeWork.
Moran said Monday Properties and WeWork found a deal similar to many happening around central San Mateo County, where owners of older buildings have renovated and reaped significant tenant demands.
"Noboby wanted to go to your dad's office building, but an older building with the right capital spend can be very attractive to today's discerning tenant," Moran said. "Once WeWork got the momentum going at Concar, they recognized that there's a strong tenant basis in San Mateo County that would have need for flexible accommodations."
