Editor’s Note: A previous version of this story has been updated with quotes throughout.
Co-working giant WeWork Companies Inc. is making a significant investment in downtown Bentonville.
The New York-based company said Monday morning (April 1) it’s planning to build a 200,000-square-foot building at 224 S. Main St., two blocks south of the downtown square. The official announcement was made at an invitation-only panel discussion at the downtown Bentonville event venue Record. It was led by Gov. Asa Hutchinson, Mayor Stephanie Orman, Greater Bentonville Area Chamber of Commerce CEO Graham Cobb and WeWork co-founder Miguel McKelvey.
In his remarks, Gov. Hutchinson said WeWork’s decision to build its first location in Arkansas is a celebration of the state’s entrepreneurial spirit, referencing the city’s most famous entrepreneur — Sam Walton — among others.
“Today, we have a new spirit of entrepreneurism that we need to promote,” Hutchinson said. “Whether it’s small businesses, tech companies or startup companies, Arkansas wants to be a leader in that. What I see in WeWork is an opportunity to expand on that and give them an environment with other entrepreneurs and small businesses other large companies who will be there.”
WeWork, a privately held company, was founded in 2010 by McKelvey and Adam Neumann. It operates as a real estate and tech company, providing shared office spaces around the world. The company began 2019 with more than 400,000 members at 425 locations in more than 100 cities across 27 countries.
“This space will offer new ways of working for organizations large and small, and will be a place for the entire community to connect,” McKelvey said. “WeWork and Bentonville share a vision for the future. We see communities and companies supporting each other in new ways. WeWork is a platform that uses space, technology and services to help people make a life, not just a living. It’s part of an ecosystem changing how we work, live and learn all over the world and we are thrilled to welcome Bentonville to our global community.”
WeWork is planning to build on a 1.56-acre site formerly occupied by a 32,745-SF nursing home facility called Bentonville Manor. The business license was relocated to a new facility in Rogers two years ago, and the building was razed last year.
The WeWork building will, obviously, have multiple floors, though the exact number is not determined. It will fit within the city’s current zoning standards, according to a WeWork spokesperson. For comparison, the 10-story Hunt Tower west of Interstate 49 in Rogers totals 226,000 square feet. Other height comparisons in Bentonville are the 8W Center, which has between 130,000 and 140,000 square feet including the three-level structured parking in the six-story building. It’s built on a little more than an acre at the corner of Eighth Street and Walton Boulevard, across from the Walmart Home Office.
Near the 8W Center is Bentonville Plaza, a nine-story office building with about 275,000 square feet. It’s built on approximately two acres.
The Bentonville project will also be one of WeWork’s first ground-up developments. It’s expected to accommodate retail, community space and a workplace for more than 3,200 people.
A WeWork spokesperson said Monday that groundbreaking likely won’t be until 2020.
Enterprise customers (members with over 1,000 employees) account for more than 30% of WeWork’s total membership base, according to the company. Forty-six percent of enterprise members credit WeWork with giving them the freedom and flexibility to grow to new markets. As of September 2018, 30% of the Global Fortune 500 were with WeWork.
A recent report at Forbes.com described the company as growing at a “breakneck” pace, with revenues approaching $2 billion last year.
WeWork has attracted nearly $13 billion in venture capital since the company launched, according to Forbes, with the most recent cash infusion of $6 billion in January from Japan’s SoftBank putting the company’s valuation at $47 billion, one of the most valuable startups in the world.
Co-working spaces are becoming more popular for small companies that don’t want to commit financially to long-term building leases, as well as for freelance workers who don’t have a permanent office.
“WeWork is disrupting a multitrillion-dollar industry with a technology platform that provides a complete solution for space needs,” Masayoshi Son, Chairman & CEO of SoftBank Group Corp., said in a news release announcing the bank’s investment. “WeWork has already experienced unparalleled growth and we are confident that with [CEO] Adam’s [Neumann] vision and this growth capital the company will be able to aggressively pursue the enormous market opportunity ahead of them.”
The Bentonville development will be an investment partnership that includes WeWork and the landowner, City Center LLC, led by Bentonville developer Josh Kyles.
Kyles said the proximity of the WeWork building will “flow together” with the downtown square and other large-scale projects that are in various stages of development nearby, namely the Momentary and the future Walmart Home Office campus.
“And I do think that [building] density is going to have to be driven up over time,” Kyles said. “And this will give a better work experience for people. They activate the space to where it’s for many different types of people. Office space has always been geared to one certain box. And they activate so many other boxes for people.”
WeWork says it worked closely with Cushman and Wakefield/Sage Partners in Rogers on site selection for the urban infill project. Michel Rojkind, who recently joined WeWork as the global company’s senior vice president of architecture, will oversee the Bentonville building design.
Marshall Saviers, the president of Sage Partners, said the firm has been looking for the right location in Northwest Arkansas for WeWork for the past two years.
“This will bring a lot of energy to the area,” he said. “The Millennial types that want that ‘work-live-play’ environment. Bentonville already has a lot of that, but this brings a different component.
“WeWork has really tapped into that ‘secret sauce’ of how people like to work and want to work,” Saviers added. “It’s very different than 15 to 20 years ago when people wanted a corner, private office. Now they want an experience and an environment. This will provide that.”
Nelson Peacock was one of several regional business leaders in the crowd of more than 100 to attend Monday’s event. Peacock is the president and CEO of the Northwest Arkansas Council, the influential economic development nonprofit whose overarching job is to recruit people and businesses to the area.
“I think this speaks to where this region is heading,” Peacock said. “And it speaks to a lot of the broader goals that [the Northwest Arkansas Council] has, which is creating density downtown, providing spaces where people can get together and create an entrepreneurial environment. It really meets a lot of our objectives and it’s really a significant step for the region and for Bentonville.”
Paul Esterer, a principal and president of the Northwest Arkansas office for Little Rock-based Newmark Moses Tucker Partners, has helped develop several projects in Bentonville, including the 8W Center and the 8th Street Market. Newmark is also investing $3 million to redevelop a vacant warehouse building in downtown Bentonville into a Class A office building. It’s at the corner of 10th and Main streets, south of the square.
Esterer said the WeWork announcement will have a ripple effect on the commercial office market in downtown Bentonville.
“It brings more depth to the class A office market, which has already been growing in the downtown Bentonville submarket,” he said. “And it provides more options for tenants who want to be close to the [downtown] core, close to the [Walmart] headquarters and close to the downtown experience.
“And I think for other investors who have been trying to pencil in projects in downtown, this gives them the confidence that there’s support for those types of projects. I would expect this will take some of those deals that are maybe sitting on the table, it’ll push them over the edge to go forward.”