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36-Story Decision

by Ben Spradling | Oct 25, 2019 2:01:47 PM

A national story took on a local angle earlier this week when
WeWork, the New York City-based real estate startup, announced it was backing
out
of an agreement to occupy a 36-story building in downtown Seattle. The
company had been planning to outfit the tower, which is still under
construction in the city’s Belltown neighborhood, with both co-living and
co-working spaces.

WeWork’s decision to nix the deal was described as a move to
“refocus on its core business” amid a recent string of widely publicized
struggles. Within the past few months, the company has seen the removal of its
CEO, experienced unfavorable financial projections and learned that carcinogens
may be residing in some of its current properties
. In the midst of all the
controversy, refocusing seems like the right call.

But where does that leave us? When a major
company opts out of a community, it seemingly takes opportunity with it. Will
Seattle’s local economy ultimately pay the price for a national organization’s
struggles?

A primary place to look is employment. The decision from
WeWork to scale back their expansion in Seattle isn’t quite like the shuttering
of a major factory that leaves hundreds or thousands of community members
without jobs. And it doesn’t exactly have the same tone as the recent
decision by Amazon
not to expand its headquarters to NYC – a move that
caused some to mourn the loss of a projected 25,000 new jobs in the area.

WeWork is different in that it doesn’t directly create jobs;
it houses them. The company purchases real estate space, breaks it up into
smaller offices with common areas, and then leases those newly created
workspaces on either the individual or group level. Occupants enjoy all the
benefits of a fully furnished office without nearly the hassle or expense.

The typical market for these types of working arrangements is
freelancers and startups. And for those who haven’t noticed, Seattle
is a top landing spot
for individuals who own those career pursuits. WeWork
choosing not to go forward with their Belltown expansion may mean fewer
immediate options for emerging entrepreneurs. It could be tougher for the next
Uber or Airbnb to find their home in Seattle.

The same could be true for larger, more established businesses,
too. Prior to their recent setbacks, WeWork had shifted their focus to rethinking
workspaces for Fortune 500 companies
. Those organizations increasingly want
instant and nimble work environments in the locations where they operate.
Because WeWork is structured to satisfy those needs, its decision not to expand
in Seattle may keep some of the business world’s biggest players from growing
in Western Washington.   

But the market may be painting a rosier picture. Even
without WeWork’s expanded presence, Seattle is still considered to have one of
the nation’s largest supplies of flexible workspaces. And that real estate is
only getting more attractive. According to analysis from Coldwell Banker
Richard Ellis, flexible office space could make up 22
percent of all offices
by the year 2030. Currently, flexible office space
comprises only 1.8 percent of that market.

It’s not always comforting when a national company packed
with potential rethinks its plans. But in the case of WeWork opting not to
expand in Western Washington, Seattle is poised to fill any vacancies left
behind.

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