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.