Coworking-space giant WeWork reaches Philadelphia with big plans for city

Dave McLaughlin, WeWork's eastern U.S. general manager, poses in front of their logo outside their building in Northern Liberties on May 26, 2016.

Shared-office giant WeWork opens its first Philadelphia location Wednesday, a validation of - and potential threat to - the city's large existing contingent of collaborative-workspace operators.

The 30,000-square-foot, two-story space at the former Schmidt's brewery building in Northern Liberties' Piazza development is the first of three shared-office facilities planned in the city by New York-based WeWork.

To follow in the fall are a 30,000-square-foot space at 1430 Walnut St. - a glass-walled retail building that also accommodates a Cheesecake Factory restaurant - and a 40,000-square-foot location on the 19th and 20th floors of 1601 Market St.

"We look for cities that have a robust mix of the right elements: a real percolating tech community, an active investment community, strong support from the city," said Dave McLaughlin, the company's eastern U.S. general manager. "All those pieces are in place here."

The six-year-old company comes to Philadelphia after opening more than 90 locations in 28 cities worldwide, reportedly accruing a valuation of about $16 billion. It is now the second-biggest provider of coworking space in the country, after the older - and arguably dowdier - Regus chain of business centers from Luxembourg.

WeWork's opening on the long-vacant lower levels of the Schmidt's building, beneath four floors of apartments, coincides with a rebranding campaign for the Piazza, which owner Kushner Cos. of New York is renaming the Schmidt's Commons after making upgrades to apartments. New retail tenants also are being sought.

The WeWork space features hallways of glassed-in offices along the aged industrial building's exposed brick walls, with lounges serving coffee and beer, a game room, and event areas.

One of its first tenants is New Hope-based MeetMe Inc., a social-networking app developer that's leasing a 14-desk office to tap central Philadelphia's growing pool of young, tech-savvy workers.

"As we recruit more people, we'll be able to recruit them directly here," said MeetMe's chief technology officer, Jonah Harris. "There's a large, untapped, creative group of engineers that we'll be able to harness."

WeWork is entering a market already dense with similar providers, from national operators such as Arlington, Va.-based MakeOffices, to smaller, locally based ones like Benjamin's Desk.

They account for about 400,000 square feet of existing or planned coworking space throughout Center City and University City, according to a March report by commercial real estate services firm JLL. That's more than enough to fill the Dow building at Sixth and Market Streets.

WeWork brings to the mix a massive scale that enables it to deliver high-end space at competitive prices, while linking members to its global online network of potential contacts and collaborators, McLaughlin said.

"Doing something at the scale that we're doing it, it's not just bigger, it's substantively different," he said. "The critical mass in the community and our ability to invest back into the platform is just that much greater."

Joe Taylor Jr., marketing chief for Benjamin's Desk, said WeWork's arrival shouldn't trouble the city's existing shared-office providers because demand for coworking space will rise as the city's tech industry grows and as independent contractors take an ever-greater share of its workforce.

"It validates what Benjamin's Desk has been doing for a long time," Taylor said. "Philly is a place where there is so much opportunity that the national folks are coming to town."

But Brad Denenberg, founder of the now-defunct Seed Philly business incubator and coworking business, said the city's smaller operators will have trouble competing with WeWork's offerings, such as the convenience of being able to easily book office space around the world online.

"If I were in the traditional coworking-space business, I would be very afraid that WeWork is going to eat everyone's lunch," Denenberg said.