WeWork, the fast-growing co-working startup, has signed a lease for around 70,000 square feet in its first deal in San Francisco's North Financial District, said four sources with knowledge of the deal.
The New York-based company, valued at $10 billion, will open what will be its sixth San Francisco co-working space at 600 California St., a 400,000-square-foot tower on the cusp of Chinatown.
WeWork's five other locations in San Francisco are mostly in the South of Market and Mid-Market neighborhoods. It also has a location in Berkeley.
The company, which rents out desks and offices by the month, has grown aggressively as it attracts tech startups and entrepreneurs who want flexible office space and a sense of community, with regular networking and events. WeWork is projecting aggressive growth and has lured investors including Goldman Sachs and Mort Zuckerman of Boston Properties Inc. (NYSE: BXP), one of the country's largest office landlords.
With the 600 California St. lease, WeWork is betting that demand for co-working space will exist on the north side of Market Street, which hasn't seen the same volume of tech leasing as SoMa. The building's asking rent wasn't clear, but the average Class A office rent in San Francisco is over $70 per square foot.
Seattle-based real estate adviser Bentall Kennedy bought 600 California St. for $216 million in late 2014 on behalf of the Multi-Employer Property Trust fund. Over 100,000 square feet in the building became vacant after leases with financial giants Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC)'s Merrill Lynch ended. But after building renovations and strong tenant demand, 600 California St. is now 96 percent leased, up from 57 percent in 2014, said Ashley Powell, a Bentall Kennedy senior vice president and head of transactions for the Western U.S. region.
Powell declined to comment on individual deals in the building. A WeWork spokesman declined to comment. JLL is the building's leasing agent.