The Real Deal New York

WeWork takes new location at property owned by top exec’s family

Mark Lapidus' family has interest in 71 Fifth Avenue
By Christian Bautista | June 06, 2018 03:31PM

Mark Lapidus, Adam Neumann, and 71 Fifth Avenue (Credit: Contact Out)

UPDATED, 4:11 p.m., June 6: WeWork is opening a location at a Flatiron District property partially owned by the family of one of its top executives.

The co-working giant, which was valued at $20 billion after its latest fundraising round, signed a four-floor, 45,000-square-foot lease at 71 Fifth Avenue. A company representative confirmed the deal but declined to comment. WeWork will occupy four floors in the 11-story building, controlled by Madison Capital, which acquired the ground lease for about $85 million in 2016.  Sources said the deal was carried out between Madison and WeWork. The fee interest in the property, however, is partly owned by the family of Mark Lapidus, WeWork’s head of real estate.

WeWork currently has at least nine locations in the neighborhood, including 18 West 18th Street, where the company signed a 167,000-square-foot lease last February.

The transaction continues WeWork’s leasing tear in Manhattan, where it is among the biggest private tenants. According to CBRE, the company’s footprint in the borough, including spaces it doesn’t yet occupy, totaled 4.1 million square feet during the first quarter. Over the past month, it closed around 130,000 square feet in lease deals at 214 West 29th Street and 130 Fifth Avenue.

At 71 Fifth, a 132,000-square-foot office and retail building located between 14th and 15th Streets, the biggest tenant before the WeWork deal was Ovation Corporate Travel, which has a 26,000-square-foot lease that expires in 2019. .

Lapidus’ family and Samco Properties jointly own the fee interest. It’s unclear when the partnership gained control of the property, but loan documents show Samco’s involvement dates back to the mid-1970s.

By the end of 2018, WeWork expects to increase its number of national and international locations to 400. Its expansion comes at a price. According to the Financial Times, the company registered total revenues of $866 million in 2017, with a net loss of $833 million.

And as WeWork has mushroomed into one of the country’s most valuable startups, it’s also become notable for commonly doing deals with family members of top company executives, raising questions of potential conflicts of interest.