The Real Deal New York

WeWork to buy Extell’s leasehold in Hudson Square

Market for flexible office space is booming, executives say

October 05, 2012 06:00PM
By Adam Pincus

175 Varick Street

The flexible office suites company WeWork and the Boston-based investment firm AEW Capital Management are in contract to pay Extell Development $33.5 million for a long-term leasehold at 175 Varick Street in Hudson Square, several sources familiar with the deal said.

WeWork and AEW signed the contract to buy the long-term lease in August and the deal is expected to close in November, the sources said.

The Jones Lang LaSalle capital markets team of Richard Baxter, Jonathan Caplan, Scott Latham and Yoron Cohen was marketing the property on behalf of Extell.

WeWork, which leases flexible office space to short-term tenants, moved into the building nearly a year ago after signing a 15-year lease for 75,000 square feet in the building where it is now headquartered. The firm has six locations in Manhattan and one each in San Francisco and Los Angeles.

WeWork is part of a rapidly growing industry that leases office space to start-ups and other firms that have a limited presence in Manhattan. Other competing office companies active in the city include Virgo Business Centers, Emerge, Corporate Suites and Jay Suites. The company OfficeLinks recently inked a lease for its fifth location in Manhattan.

“The market is booming,” said Juda Srour, president of Jay Suites, which has five locations in Manhattan.

Extell bought the leasehold on the 185,000-square-foot office building located at the corner of Charlton Street, in 2005, for $24 million, data from CoStar Group shows. The building is owned by members of the Lehman family. Extell hired the JLL brokers last fall to market the leasehold, which city records show runs until the end of 2017.

Extell and JLL declined to comment. AEW and WeWork did not immediately respond to a request for comment.

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