By David Jeans, The Real Deal
WeWork is partnering with RXR to manage 90,000 square feet at 75 Rockefeller Plaza in a revenue-sharing agreement, the first such deal the co-working giant has reached in New York.
The $47 billion flexible office space company — whose parent the We Company last month filed paperwork for an initial public offering — will take four floors in the 32-story tower, WeWork said Thursday. No information was provided on the value of the deal.
It comes a week after RXR announced that it would partner with Airbnb to manage 200 hotel-style units in the building for professionals — a feature that would complement WeWork’s office platform. WeWork and Airbnb will also nestle in beside Convene, another flexible-office space provider, which took 28,000 square feet in the building last year.
Unlike a conventional lease, WeWork and RXR will share the revenue generated by WeWork’s users, and split renovation costs. Other firms like Industrious already use that model at their locations. It was not disclosed how those figures would be divided. WeWork said one of its enterprise clients had agreed to take the entire space, but did not disclose the name of the firm.
WeWork said it currently has a handful of revenue-sharing agreements with landlords in London, Malaysia, China and Brazil, prompted by a move from landlords to launch their own flexible-office space platforms.
“We’re seeing landlords recognize the changing nature of the workplace and the value our business model presents,” a spokesman for WeWork wrote in a statement. “This is reflected by the fact that a number of them have set up their own flexible space business.”
In 2012, RXR leased 75 Rockefeller Plaza for 99 years and has since overhauled the building, converting the bottom floors to office, while saving top floors for a potential hotel or residential use. The firm spent almost $250 million on the lease, and further $250 million on renovations. Scott Rechler, RXR’s CEO, said at the time that he hoped to command $100 a square foot in rent.
RXR did not immediately respond to a request for comment.
The RXR platform manages 71 commercial real estate properties and investments with an aggregate gross asset value of approximately $20.5 billion, comprising approximately 31.4 million square feet of commercial properties, inclusive of approximately 6.0 million square feet of buildings securing debt and preferred equity investments, a multi-family residential portfolio of approximately 2,500 units under operation or development, and control of development rights for an additional approximately 3,700 multi-family and for sale units in the New York Metropolitan area as of June 30, 2019. Gross asset value compiled by RXR Realty in accordance with company fair value measurement policy and is comprised of capital invested by RXR and its partners, as well as leverage.