WeWork keen on 55 Market Street

WeWork keen on 55 Market Street

2 August 2019

WeWork is about to close its largest leasing deal in Australia, lining up all 20,000sq m of the A Grade 55 Market Street, located in the heart of Sydney’s central business district on the corner of Market and Pitt streets, reports The Australian.

If the deal goes ahead, it would dwarf its previous uptake of office space, including its recently signed 11,000-square-metre lease at 320 Pitt Street.

55 Market Street is ideally located opposite Pitt Street Mall, Town Hall station and the Queen Victoria Building.

The building stands to benefit from additional investment, with Mirvac putting in plans to transform the building into a high-end shopping destination, with improvements to its front entrance.

While talks are at an early stage, the move underscores the importance of co-working tenants in driving Sydney’s leasing market where even large ­office landlords are either renting out more space to co-working groups or running their own flexible work units, as with GPT’s Space & Co.

WeWork has recently locked in space across Australia, including 320 Pitt Street, where it secured about 11,000sq m in the ARA-owned tower, and it expanded its Brisbane operation by taking 4788sq m in Impact Investment Group’s timber building at 25 King Street. In addition, last year, WeWork said it would lease 10,000sq m in the Daramu House office building at Barangaroo.

While making up only a small proportion of the market – about 2.5 per cent according to Savills – flexible space tenants are gobbling up high-grade spaces around the city, notes The Australian Financial Review.

“The continued growth of the flexible workspace providers within the Sydney CBD is impacting positively on the CBD vacancy rate,” Colliers International’s Cameron Williams said.

“With providers now committing to much larger spaces of 10,000sq m or more, this will play out further over the next 12 months.

“The smaller end of the market, particularly prime buildings with fitted-out suites, is also being impacted by the growth of the flexible workspace providers as they offer an alternative to a conventional long-term lease commitment.”

Knight Frank’s Aaron Weir saw strong co-working demand for leases of more than 4000sq m in North Sydney and the CBD.

“The focus of the big tech companies locating in the CBD is on apps and software rather than the ‘old tech’ of hardware. These are highly profitable, people-focused businesses,” he said.

“Therefore, in the war for talent, and because margins allow, the focus is more on occupying quality spaces in well-connected locations to attract and retain staff, so the CBD is a strong focus for these businesses.”