The Real Deal New York

WeWork takes 60K sf at USPS’ East Midtown post office

Coworking space provider finalized 27-year lease at 450 Lexington Avenue

February 11, 2016 12:06PM


From left: WeWork co-founders Miguel McKelvey and Adam Neumann and 450 Lexington Avenue (credit: RXR Realty)

Usually, neither snow nor rain nor heat nor gloom of night stays these coworking giants from the swift completion of their appointed rounds.

Except this time WeWork encountered the bureaucratic United States Postal Service, and a lease deal for 60,000 square feet at the USPS’s East Midtown post office took over two years to negotiate.

The collaborative workspace provider will take the entire fourth floor of the USPS’ six-story facility at 450 Lexington Avenue for a 27-year term.

The postal service was eager to lease space to WeWork because it wasn’t inclined to put capital into the building and was willing to do “cheaper-than-market deals for someone to come in and take [space] off their hands,” Mark Lapidus, WeWork’s head of global real estate, told the New York Observer.

Lapidus said WeWork paid “$20 something” per square foot.

WeWork, known for closing lease deals with all deliberate speed, will invest $350 a foot at the building, replacing windows and performing various interior work. Though it will share space with the government agency office, WeWork will have its own entrance and elevator on a side street.

RXR Realty owns the 32-story, 910,000-square-foot office tower on top of the post office through a $720 million ground lease.

WeWork’s valuation recently jumped 50 percent to $15 billion after Fidelity Investments reported that its shares in the company had appreciated greatly in the fourth quarter of 2015. WeWork is also reportedly seeking another round of financing. [NYO]Dusica Sue Malesevic