Global flexible workplace provider WeWork and e-commerce giant Amazon have partnered again in another major office deal, this time in California's Silicon Valley tech hub.
WeWork took 217,000 square feet at a Class A building at 401 San Antonio Road in Mountain View on behalf of Amazon, which has been a WeWork enterprise member, a WeWork spokesperson told CoStar News. The deal is structured as a licensing accord with the sublandlord, the spokesperson said, declining to provide more details. The property is owned by Brookfield Properties as part of its mixed-use Village at San Antonio Center development. A Brookfield spokesperson declined to comment.
This WeWork location will include “flexible, amenity-rich workspaces that aim to enhance productivity, foster collaboration and accommodate unique workstyles,” the WeWork spokesperson said. “Our adaptable workspace solutions play a vital role in meeting enterprise clients’ evolving office needs, reflecting the growing desire among large companies to adopt flexible, future-ready work environments.”
While the agreement isn't a lease, by the amount of space taken it would rank as one of the 10 largest office deals in California this year, according to CoStar data.
The two firms recently also partnered in a more than 300,000-square-foot lease at 330 W. 34th St. in New York as Amazon CEO Andy Jassy said in September that employees are expected to be back in the office five days a week come Jan. 2, part of a slew of major employers, including computer maker Dell Technologies and banking heavyweight Citigroup, that have announced stricter in-office mandates.
“Our work with WeWork is part of Amazon's broad real estate strategy,” an Amazon spokesperson told CoStar News. “We're always evaluating our office footprint based on the needs of our businesses.”
Amazon occupies other WeWork locations, including 1440 Broadway, just a few blocks south of Times Square, in New York.
The Mercury News earlier reported the California partnership. At various times, Facebook and LinkedIn had taken space at 401 San Antonio through rental agreements, the publication said.
National office tenant
Amazon’s U.S. real estate footprint includes owned and leased properties from coast to coast. For instance, in New York, it leases office space at several buildings including Brookfield’s Five Manhattan West, 450 W. 33rd St., where it occupies more than 285,000 square feet, according to CoStar data. The company opened its New York flagship at the former Lord & Taylor department store building it acquired and redeveloped at 424 Fifth Ave.
In Silicon Valley, Amazon signed one of California’s largest office leases this year at 1100 Enterprise Way in Sunnyvale, adding to a slew of other spaces it already has leased in the Bay Area, CoStar data shows.
Major office developers including BXP, whose portfolio includes New York’s iconic GM Building, and SL Green Realty, Manhattan’s largest office landlord, have said stricter in-office requirements bode well for the sector.
The WeWork-Amazon partnership comes as the Mountain View market, where 401 San Antonio sits and where Google is based, has seen its office vacancy rate surge to 20.15%, the highest in at least 10 years, in contrast to New York and the U.S. average of about 14% each, according to CoStar data. Still, while the market has seen more move-outs than move-ins this year, there have been signs of improvement.
“The large downsizings that characterized 2023 have diminished, and several sizeable new leases have been signed,” according to a CoStar analysis, adding that rent growth has turned positive in the past year despite the vacancy rate increasing.
WeWork emerged from bankruptcy protection in June. In October, the firm announced it would expand into North America's suburbs, but not through signing expensive leases at the cost of profit — the operational strategy that led to its previous financial troubles.
The partnership with Amazon shows WeWork is “seeking (and finding) some stability via corporate/enterprise-level customers,” said Phil Mobley, CoStar Group’s national director of office analytics, adding that the strategy makes sense given WeWork is now led by former Cushman & Wakefield executive John Santora, who is used to dealing with large occupiers.
WeWork has seen growing demand from large clients and its enterprise members, which involve companies with at least 500 employees, the WeWork spokesperson said.