With 222K SF WeWork Anchor, Rudin Set To Open Dock 72 Office Project
Want to get a jump start on upcoming deals? Meet the major New York City players at one of our upcoming events!
Back in 2013, a 3-year-old coworking startup named WeWork came to New York's Rudin family, local real estate royalty, with an idea.
The Brooklyn Navy Yard had approached WeWork about a location in the sprawling redevelopment of the decommissioned shipbuilding facility, and the company approached Rudin Management to gauge the family business's interest in a major Brooklyn office project.
Rudin Management CEO Bill Rudin, the grandson of company founder Samuel Rudinsky, had reportedly met company CEO Adam Neumann at a cocktail party a year before and was an early WeWork investor. The coworking firm was already in the process of securing a full-building lease at Rudin's 110 Wall St. tower, where Superstorm Sandy had wreaked havoc.
Six years later, the fruit of that discussion is Dock 72, a 675K SF office building at the Navy Yard, Rudin's first Brooklyn project. Nearly a third of the building, owned and developed by Rudin and Boston Properties — whose chairman, Mortimer Zuckerman, was also an early investor in WeWork — will be filled by WeWork in one of its biggest locations.
While WeWork will occupy the building in a standard, long-term lease, it worked alongside the developers, helping design and curate the building, Rudin officials said.
Dock 72 opens next month, with WeWork leasing 222K SF across half of the third through sixth floors, and all of the seventh and eighth floors. WeWork will also manage the entire 16-story building's health and wellness offerings.
A Rudin spokesperson said WeWork will be welcoming hundreds of workers to the new location next week, but the company's broader leasing strategy — like how much space will be reserved for enterprise companies, which make up 40% of WeWork's business — for its Dock 72 space is unclear.
Roughly 450K SF of office space remains available at the building, and no office tenants aside from WeWork have been publicly announced.
“Clearly [WeWork] has had success in their model, and [in] building spaces where folks can collaborate, and the type of environment that companies and startups are looking for,” Rudin Vice President of External Affairs Nicholas Martin told Bisnow during a recent tour of the building. “We've heard from some tenants who like the idea of having WeWork in the building because it gives them flexibility.”
WeWork is the most-debated company in commercial real estate right now, with its initial public offering attempt generating a flood of unfavorable headlines and, ultimately, a postponement until next month at the earliest.
The company released its prospectus in August, disclosing enormous losses and a complex governance system that sparked a barrage of criticism. Its $47B private valuation — which some had scoffed at for some time — has reportedly been sliced by nearly 70%.
The company amended its IPO filing earlier this month to include more oversight, and less voting power, for Neumann. Last week, the company announced it would delay its IPO until at least mid-October, but vowed to go public by the end of the year.
By Sunday, multiple reports emerged that SoftBank and other major investors were trying to push Neumann out of the CEO position.
“It’s noise, not news,” Tim King, managing partner of Brooklyn-focused brokerage CPEX Real Estate, said of the slew of WeWork coverage. “This [Dock 72] deal was made a long time ago. WeWork is well-established in there.”
Martin said WeWork is still a selling point at the building, and that Brooklyn’s young population and bustling tech and startup culture are the reasons the building, and its mammoth WeWork, will succeed.
“We think it's a very strong market, if you look at the number of highly educated people who live in and are moving to Brooklyn,” Martin said. “We're certainly confident in the product.”
Dock 72's floor plates range from 42K SF to 62K SF. It has 35K SF of common indoor amenities, including an event space, which is available to tenants and for rent.
On Monday, the developers announced a 13K SF food hall in the buidling will be managed by FLIK Hospitality, and Danny Meyer’s Union Square Events will be consulting on food stations.
There are also 18K SF of outdoor terraces and 10K SF of waterfront amenities, including an outdoor basketball court. The building itself is built 8 feet above the sidewalk and a foot above the 100-year flood level.
All of the mechanical equipment is on the second floor of the building and the roof, and the lower part of the building has louvers that would allow for water to flow through in the event of a flood. Were the building to be inundated, it could reopen the next day, according to Rudin.
Dock 72 doesn't have easy access to a subway, but Rudin points to the East River ferry terminal, which docks outside the building, and the shuttle bus service that runs to Dumbo and Atlantic Avenue stations, as transit options that will serve its thousands of eventual occupants.
The building is not short on competition. Office availability in Brooklyn is over 17%, according to Colliers International mid-year figures. There is nearly 7M SF of new office space due to deliver by 2022.
Among the new buildings competing with Dock 72 for tenants taking up large blocks of space are the former Jehovah’s Witnesses' Watchtower complex, now dubbed the Panorama, as well as the 500K SF building at 25 Kent Ave. in Williamsburg. All three are looking for their first non-coworking office tenants.
Rudin is banking that Dock 72's geography will be an advantage, rather than a hindrance. As for WeWork and its corporate struggles, Martin said the developers don't have insight into the coworking space's lease-up plans, outside of saying through a spokesperson that "several hundred WeWork members are moving into the building next week."
“People want to live and work in Brooklyn,” Martin said. “We think the amenity offering both in terms of the square footage and the qualities are very unique … I can't think of another office building in New York City that is surrounded by water on three sides.”
CORRECTION, SEPT. 11, 6:30 P.M. ET: Samuel Rudin founded Rudin. An earlier version of this story misidentified the founder. This story has been updated.