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If WeWork Disappeared Tomorrow, No Single Landlord Would Suffer A Catastrophe

Coworking giant WeWork has been expanding at a lightning pace recently, nearly doubling its square footage in 2017, but no single landlord — or even a small group of landlords — is overly exposed to WeWork leases.

The interior of a WeWork office

Even the roughly 500K SF each that the coworking specialist leases from Boston Properties and Rudin Management Co., the largest WeWork landlords, represents only a small fraction of their respective portfolios, CoStar reports.

In the case of Boston Properties, WeWork accounts for roughly 0.8% of the REIT's more than 50M SF portfolio. For WeWork, which has a roughly 10M SF footprint these days, Boston Properties is the landlord of about 5% of its space.

For Rubin, the co-working company occupies less than 5% of its office portfolio.

"With a veritable who’s-who of institutional owners lining up to do deals with WeWork, there is still no single owner with significant exposure," read a recent Eastdil Secured report about WeWork, as cited by CoStar.

Other WeWork landlords include Kushner Cos., L & L Holding Co., Merlone Geier Management, Kato International and Callahan Capital Properties.

WeWork's growth model so far not only includes a diversity of landlords, but also deals that individual tenants typically would not be able to get. WeWork leases space at a significant discount, and then remakes the space into a creative office environment. Landlords so far seem to be happy with that arrangement, since coworking is considered an important new component of office real estate (though not everyone is on board with that). 

Leasing space seems to be only the beginning for WeWork, which is evolving into a real estate behemoth, with investments, partnerships and acquisitions including branching into coding academies, media companies and even an elementary school.

The company's anticipated initial public offering has yet to occur, but a recent bond offering netted the company at $702M. Total valuation for the company is now around $21.6B.