{"id":1004199547,"date":"2017-12-06T06:51:25","date_gmt":"2017-12-06T14:51:25","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004199547"},"modified":"2022-12-08T09:14:36","modified_gmt":"2022-12-08T17:14:36","slug":"what-weworks-jump-into-retail-means-for-reits","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/what-weworks-jump-into-retail-means-for-reits\/","title":{"rendered":"What WeWork\u2019s Jump Into Retail Means for REITs"},"content":{"rendered":"<p>By Stuart Eisenberg<\/p>\n<p><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/02\/stuart-eisenberg_1_800x600.jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004165733\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/how-low-can-you-go-cmbs-market-in-limbo\/stuart-eisenberg_1_800x600\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/02\/stuart-eisenberg_1_800x600.jpg\" data-orig-size=\"800,600\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"stuart-eisenberg_1_800x600\" data-image-description=\"\" data-image-caption=\"&lt;p&gt;Stuart Eisenberg&lt;\/p&gt;\n\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/02\/stuart-eisenberg_1_800x600.jpg?w=800\" class=\"alignright size-medium wp-image-1004165733\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/02\/stuart-eisenberg_1_800x600.jpg\" alt=\"stuart-eisenberg_1_800x600\" width=\"300\" height=\"225\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/02\/stuart-eisenberg_1_800x600.jpg 800w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/02\/stuart-eisenberg_1_800x600.jpg?resize=300,225 300w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/02\/stuart-eisenberg_1_800x600.jpg?resize=768,576 768w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>While lots of eyes and attention remain fixed on 2017\u2019s string of retail bankruptcies and the growth of \u201cclicks-to-bricks\u201d retailers, WeWork may be quietly laying the foundation for a broader move into retail real estate. There certainly appears to be no shortage of funding momentum for the $26 billion startup, following a $4.4 billion <a href=\"https:\/\/www.commercialsearch.com\/news\/wework-scores-4-4b-investment\/\">commitment from the SoftBank<\/a> Vision Fund in August that is expected to fuel global expansion.<\/p>\n<p>And REITs should be watching\u2014WeWork\u2019s model for expansion could disrupt not only office REITs, but REITs across some unexpected sectors.<\/p>\n<p>Underscoring the company\u2019s interest in potentially extending its business model into the retail space, the <em>Wall Street Journal<\/em> reported that WeWork Property Advisors would get a seat on the Hudson\u2019s Bay Co.\u2019s (HBC) board after WeWork and its private equity partner Rhone Group acquired the Lord &amp; Taylor building in Midtown Manhattan from HBC in October.&nbsp;It has also been reported that WeWork principals have invested in a retail technology start-up and that several of the real estate company\u2019s recent hires hail from an online electronics retailer.<\/p>\n<h2>Behind the Lord &amp; Taylor Buy<\/h2>\n<p>One factor that makes the Lord &amp; Taylor deal notable is the $850 million price tag. The property sold for 30 percent more than its appraised value last year. While the property\u2019s location likely partially contributed to the deal value, it\u2019s no secret that there\u2019s a greater demand for spaces that can be converted to alternative uses, and the building\u2019s flexibility might have also driven up the price. This suggests REITs that own buildings that can be readily converted to alternative use could see a bump in valuation based on an assumption that the highest and best use value exceeds the value based on the existing use. Retailers with flexible space in prime markets, where demand remains high, are likely to see the greatest benefit.<\/p>\n<p>This trend isn\u2019t limited to retail, though. On the hospitality front, WeWork has experimented with nightly rentals in its co-living space in lower Manhattan. During a <a href=\"https:\/\/www.commercialsearch.com\/news\/co-working-creeps-into-corporate-property-strategy\/\">recent panel<\/a> at the Urban Land Institute Fall Meeting moderated by WeWork\u2019s Liz Burow, several industry leaders pointed to the growing emphasis on short-term lease arrangements across industries. Panelists noted that space flexibility is now playing a key role in growth trajectory for many types of companies, with flexible lease terms allowing for the development of new groups within a company and greater experimentation with short-term projects.<\/p>\n<p>Adaptability is the name of the game for a huge variety of tenants\u2014think retailers, food pop-ups and boutique hotels, but also health care providers, as the care continuum expands far outside the walls of traditional hospitals. For REITs, this means potentially baking in greater flexibility to lease-term length in sectors beyond offices, and further blurring the lines in large mixed-use spaces. These changes could have significant implications for REITs\u2019 maintenance and property management needs, as well.<\/p>\n<p>When it comes to the co-everything movement, We(will be)Watching.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The hefty price WeWork paid for the Lord &amp; Taylor building in Manhattan suggests that REITs with easily convertible buildings in desirable locations could see a bump in valuation. BDO USA Partner Stuart Eisenberg explains why.<\/p>\n","protected":false},"author":1263,"featured_media":1004165733,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[23891,21684],"tags":[33206,42461,33788,33678],"class_list":["post-1004199547","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-national","category-viewpoint","tag-bdo-usa","tag-coworking","tag-stuart-eisenberg","tag-wework"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What WeWork\u2019s Jump Into Retail Means for REITs - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/what-weworks-jump-into-retail-means-for-reits\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What WeWork\u2019s Jump Into Retail Means for REITs\" \/>\n<meta property=\"og:description\" content=\"The hefty price WeWork paid for the Lord &amp; Taylor building in Manhattan suggests that REITs with easily convertible buildings in desirable locations could see a bump in valuation. 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