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Breaking: WeWork Banks on Brokerage Business

Co-Working Giant to Launch Space Services Pilot in September in New York City
July 20, 2018

WeWork, the co-working and shared space giant, not only wants to be your landlord. It also wants to be your tenant representative when your firm moves on.

WeWork said late Friday it would launch WeWork Space Services in September with a pilot program in New York City, where the company is based. The program, aimed at small and mid-sized businesses, will provide real estate advice and help firms find new work spaces, whether inside a WeWork location or in a non-affiliated property.

"Leveraging our position as one of the largest occupiers of office space in New York City, our intimate knowledge of the real estate market and the extensive relationships we have built with landlords in the city, we will now be able to offer holistic real estate solutions -- both within and outside of WeWork -- to small and mid-sized companies," WeWork said.

Jason Bauer.

Jason Bauer, who launched a boutique real estate firm in 2013 and founded Crumbs Cake Shop, will lead the initial launch of WeWork Space Services.

The Space Services program will benefit its landlord partners, WeWork said, because "in addition to the lease agreements we sign for WeWork itself, we will now be bringing new tenants to them."

Carl Muhlstein, one of Los Angeles’ top office brokers and an international director at Chicago-based brokerage Jones Lang LaSalle Inc., said the news reveals just how bold WeWork is becoming.

"They already were in brokerage with commission sharing and package deals, they just didn’t admit it," Muhlstein said. "But what’s interesting is they are becoming more brazen -- providing architecture, construction, facilities management and now brokerage services, which means they are not scared of alienating any segment of the commercial real estate industry."

WeWork's tenant representatives will be independent contractors under a similar model used by most of the major brokerage firms.

The move would create another revenue stream for WeWork as it operates as a broker on behalf of space-seeking firms. However, it could irk some tenant representatives because WeWork Space Services would compete with the same tenant reps who bring clients to WeWork.

Early on, some tenant representatives complained WeWork did not pay full broker commissions, but now WeWork does. So it's possible WeWork could face backlash from tenant reps and brokerage firms.

To this end, WeWork is ensuring tenant brokers they remain an important part of their business. "This is an exciting new chapter for our business and reflects our strong belief in the brokerage business," the company said in announcing its Space Services program. "Brokers are critical partners for WeWork, and we will continue to rely on and partner with them to bring clients to our community."

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