Amid Upheaval, WeWork Signs 72K SF Lease With Piedmont REIT
Despite the corporate upheaval with a failed IPO and plans to lay off thousands of workers, WeWork continues to make inroads in Atlanta's office market.
The coworking giant inked a deal for 72K SF at 1155 Perimeter Center West through 2035, Piedmont Office Realty Trust CEO Brent Smith told stock analysts during his company's third-quarter earnings call.
"[We] had not done a lease with WeWork until the second quarter of this year, primarily because they weren't able to meet our credit terms," Smith said during the call. "They did reach a level that we felt comfortable with and we did decide to move forward with that. We really deal with larger tenants, and we find that these operators are a great way to target that 2K SF to 5K SF tenant and help us kind of leverage our operating model."
The deal represents one of WeWork's first suburban Atlanta locations and is part of a pipeline of some 300K SF that WeWork previously announced for the metro area, including an 80K SF location at 101 Marietta St. in Downtown Atlanta, a 112,500 SF location at the Interlock development in West Midtown and a 57K SF location planned for the Halcyon mixed-use development in Forsyth County.
Including those planned locations, WeWork's coworking presence in Metro Atlanta encompasses more than 760K SF, according to data compiled by Transwestern, with locations at Tower Place 100 and Terminus 100 in Buckhead, Coda and 725 Ponce in Midtown.
All of WeWork's signed leases in Atlanta remain on schedule to open as planned, a WeWork spokesperson previously told Bisnow. S.J. Collins officials confirmed that WeWork was still on track to occupy space at The Interlock once it is completed.
"Absolutely it is still happening. We have monthly meetings with the WeWork design team to finalize the details and have confidence this will be a best in class coworking space,” S.J. Collins partner Jeff Garrison said to Bisnow in an email. “WeWork is an incredible operator. Their current losses stem solely from their meteoric expansion and says nothing about their ability to operate a best-in-class coworking space at The Interlock.”
After WeWork pulled plans to go public when it was met with a tidal wave of skepticism from investors, causing the company's value to tumble and forcing the ouster of CEO Adam Neumann, the company had teetered on the edge of insolvency. SoftBank Group, WeWork's main financial backer, took over the company las month in a $9.5B deal. The Japanese conglomerate now owns more than 80% of its shares, and provided the coworking company with $5B in new financing.
Smith also told analysts on the call that Piedmont was in the running for Sherwin-Williams' build-to-suit headquarters relocation from Cleveland to Atlanta, specifically at its Galleria office park site in Cobb County, where it can build in excess of 1M SF.
“So they are looking at a number of cities, first and foremost, it's Atlanta, Charlotte and Dallas, as that's been reported in the press. And even within Atlanta, there are multiple locations they could go. It is still very early,” Smith said. “We believe the [Galleria] site is among the best in Atlanta, and we are well-positioned to attract some of the large corporate tenants looking to relocate to the Atlanta market.”
Cleveland-based Sherwin-Williams has eyed Atlanta as a possible relocation destination for its headquarters and research and development operations, Bisnow previously reported. The move could potentially add up to 2,000 new jobs to the metro area.
Officials with Sherwin-Williams announced in September that the company was on the hunt for a potential new headquarters and R&D facility, with a move occurring in 2023 at the earliest. The search includes multiple potential sites in Cleveland, northeast Ohio and several other unidentified states.
The company already has its Southeast division office in Atlanta, with 48K SF at 2800 Century Parkway, according to CoStar. Currently, the company's headquarters is housed in a 1930s-era office building in Downtown Cleveland called Landmark Office Towers at 101 West Prospect Ave. It occupies other downtown buildings for other functions.
Sherwin-Williams officials could announce a decision on its headquarters by the end of the year or early 2020, CEO John Morikis told stock analysts Oct. 22.
"As we look at our ability to recruit and retain the highest-caliber people in a productive and efficient environment — the technology and innovation that we need ... to continue to drive results that we know we can continue to drive on top of factoring in the maintenance costs and just overall issues that we faced in this building," Morikis said.
"It's not something that we think is any type of, 'We deserve a reward or this is our of necessity to be able to hire and retain the best people in this industry.' And we owe it to our employees, quite frankly, to put them in a better environment [than] they're working in right now. And we look at the retention of these terrific people we need to make this move," he said.