WeWork Companies Inc. has struck a deal to lease all of a just-built office in the Irvine Spectrum, and will operate one of the largest coworking spots in the U.S. at the location.
New York-based WeWork, the country’s largest and fastest-growing shared operator of flexible work spaces with short-term leases, recently inked a lease to occupy all of one of the three new mid-rise buildings at Irvine Co.’s Spectrum Terrace office development, the Business Journal has learned.
The four-story building at 17300 Laguna Canyon Road—just off the San Diego (405) Freeway—runs about 116,000 square feet. The construction recently completed; WeWork is expected to open around the end of the year, real estate sources tell the Business Journal.
The deal is the largest office lease in Orange County by square footage this year so far, according to data from real estate market tracker CoStar Group Inc.
It’s also the largest coworking lease on record in Orange County by a wide margin. No other spots in OC run larger than 70,000 square feet.
450,000 SF and Counting
The Spectrum Terrace deal stands among the largest coworking leases in the entire country over the past few years.
Only a few other national deals have topped 100,000 square feet over the past year or so, based on industry reports. The largest reported was a 200,000-square-foot deal in the financial district of New York, inked near the start of this year. WeWork also took that space; it’s the largest occupier of space in downtown New York.
Backed in large part by Japanese conglomerate SoftBank Corp.—the privately held company is said to be mulling going public, with a national portfolio topping 10 million square feet and a market value estimated at more than $50 billion—WeWork is fast becoming one of OC’s top tenants.
Its portfolio of open and soon-to-open spots in the county, located in an assortment of high-end buildings in Irvine, Costa Mesa and Newport Beach, now runs about 450,000 square feet total.
Spectrum Terrace will be WeWork’s third location in the Irvine Spectrum; its other two are at Irvine Co.’s pair of recently-built 21-story office towers along Spectrum Center Drive.
It just opened its second location in the area, for a 45,000-square-foot spot at two of the top floors at the 400 Spectrum Center tower.
The two-floor spot at 400 Spectrum Center would be large enough in a traditional office layout to accommodate about 200 or so workers.
WeWork cites a much higher figure, factoring in more communal work area and varied office hours for its members; it says the 400 Spectrum Center space can accommodate 800 members. Some real estate watchers say they suspect that figure may be rather inflated.
Private offices at WeWork’s other Spectrum locations start around $750 a month for a private office, $550 for a dedicated desk and $400 for a “hot desk” in a communal area, according to the company’s website, which has yet to note the Spectrum Terrace location among its local portfolio.
One of Three Buildings
Irvine Co. is believed to have signed up other tenants for portions of other two buildings at the 73-acre Spectrum Terrace development, whose first phase of construction totals about 350,000 square feet.
None other than WeWork has been disclosed to date.
Officials representing the Newport Beach-based landlord declined to comment on the transaction.
The WeWork and other deals are likely to spur the next phase of construction at Spectrum Terrace relatively soon, according to Randall Parker, senior managing director for the Newport Beach office of tenant representation brokerage Savills.
“Large blocks of space are very hard to find,” giving Irvine Co. more reason for push ahead on the new construction, according to Parker. The WeWork deal “could put upward pressure on rents.”
In terms of whether WeWork and other coworking firms are pushing too fast in their growth, Irvine Co. apparently doesn’t think so.
“It’s a risky deal, but they think it’s worth the risk,” Parker said.
