WeWork’s NYC lease cuts include Kushner, Vanbarton buildings

WeWork’s bankruptcy filing has more trouble in store for already struggling New York City office owners as it seeks to immediately ditch a slew of spaces.

Kushner and RFR’s Dumbo office building, Vanbarton’s Midtown tower at 980 Sixth Avenue and a handful of locations owned by smaller landlords are among the 40 leases the co-working firm moved to reject as part of its restructuring in bankruptcy court. 

A number of the leases are around in or near Manhattan’s Garment District, an area home to many older Class B office buildings and among the hardest hit by pandemic-era work policies. 

WeWork also plans to cut leases in Downtown Manhattan and Northern Brooklyn. Among the properties named in the filing are Kushner and RFR’s 81 Prospect Street in Dumbo, where WeWork was the second largest tenant.

Vanbarton refinanced 980 Sixth Avenue, known as the Hollingsworth, for $240 million in March 2020, the month that pandemic shutdowns began. WeWork reportedly leased 75,000 square feet at the tower, which has 380 luxury apartments and a retail component.

The proposed rejected leases are in buildings owned by mid-sized and institutional landlords. 

WeWork has already moved out and closed its operations where it is seeking to ditch its lease.

“The debtors’ lease portfolio has been, and continues to be, a significant contributing factor to their current financial challenge,” the company said in a filing in bankruptcy court. “Rejecting the leases will help ease the debtors’ cash burn and increase the debtors’ liquidity.”

The company, working with real estate advisor Hilco, is in active negotiations with 400 landlords to rework its leases in markets across the country.

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