WeWork Looks To Siphon Tenants From Competitors Using Hefty Broker Commissions
In the battle for tenants, WeWork is offering commercial real estate brokers 100% commission on the first year's rent paid by a tenant who moves from a major competitor.
It is a short-term offer, however: to qualify, the lease with WeWork has to be signed by Oct. 1.
Tenants also get a steep discount for jumping ship: half off the first year’s rent for signing for at least a year. Taking that discount into consideration, WeWork's bonus to brokers would be five times the commission it usually offers, or 10% of the first year’s rent, Bloomberg reports.
The company's promotional offering comes during the summer season, when business tends to slow. WeWork didn't specify which coworking competitors brokers would have to poach from to receive the hefty commission, but Knotel, IWG Plc and Industrious are on the list, Bloomberg reports, citing anonymous sources.
The move comes amid a flurry of initiatives by the coworking giant to lure new tenants, either via brokers or more directly. The company is presumably able to fund these initiatives because of recent influxes of investor capital, particularly from Japanese investor SoftBank.
In March, WeWork made another play at brokers, offering to give brokers at Cushman & Wakefield, JLL and CBRE more in commissions if they help lease up its coworking spaces.
In that arrangement, brokers get a 20% fee on a one-year lease and 5% on expansions and renewals. Typical WeWork commissions are 10% for the first year of a lease and 2% for expansions and renewals.
Earlier in August, the company announced a new product line aimed directly at midsize companies that want to be members at a WeWork, but don't like to share with other members: HQ by WeWork.
Rather than a month-to-month lease for small offices at a traditional WeWork, HQ by WeWork will be at spaces WeWork leases with a landlord, and designed as the member company chooses from a menu of features.