WeWork’s IPO face-plant caused one local developer to tear up a pending lease.
Churchill Bunn, head of Denver-based development firm Alpine Investments, told BusinessDen Monday that he backed away from a deal to have WeWork lease all 67,000 square feet of office space in a 10-story building planned for 955 Bannock St. in the Golden Triangle because of disclosures in the company’s IPO prospectus.
“The decision came down to not feeling comfortable with the three-to-five-year picture,” Bunn said of the company’s future.
Bunn said he and his representatives started talking to the coworking giant about the project, which has yet to break ground, in the fourth quarter of last year. By March, he said, the company had signed a letter of intent. The companies spent the next five months negotiating a lease.
The negotiated lease was on Bunn’s desk, but not yet executed, when WeWork released its IPO prospectus, also known as a Form S-1, in mid-August.
Bunn declined to specify the concerning aspects of that disclosure, but said he became “uncomfortable with moving forward” amidst “the overall uncertainty of what WeWork would be down the road.”
By the first week of September, Bunn said, the deal was dead. The two parties attempted to negotiate but couldn’t find common ground.
WeWork has been grabbing plenty of headlines since then. The company cut its valuation, and CEO Adam Neumann resigned on Sept. 24. The company then halted the signing of new leases for several days, according to the Financial Times. On Sept. 30, WeWork abandoned its plans to go public. The company is now said to be desperately seeking a cash infusion, according to media reports.
WeWork is the largest private office tenant in Denver, with nearly 700,000 square feet of office space leased in the city, topping DaVita.
Five WeWork locations are up and running. Four more — in Cherry Creek’s Financial House, LoHi’s Circa and downtown’s Civic Center Plaza and The Vault — are expected to open by the end of the year, according to the company. That leaves two other announced leases, at RiNo’s under-construction Rev360 and Junction23 at Denargo Market.
A WeWork spokeswoman confirmed the company did not enter into a lease agreement for the 955 Bannock building, but otherwise declined to comment.
Back on the market
The office space within 955 Bannock is back on the market, for one or multiple tenants. Brokers Judson Robertson, Blake Holcomb and Reid Freeman with Stream Realty Partners are marketing the building.
Robertson noted the project’s proximity to Speer Boulevard and higher-than-usual parking ratio, and said it will be easier to access by car compared to office buildings in the heart of downtown.
He added that the building also will have a west-facing deck.
“Tenants are craving the ability to have any type of outdoor space,” he said.
Bunn said he hasn’t determined when construction will begin.
“It is permit-ready,” he said. “We could build it and deliver it to a tenant for the first quarter of 2021.”
Alpine Investment’s other projects include condo building Edge LoHi, which is expected to be completed this quarter. The 955 Bannock building will be the company’s first office development.