Flexible-office company Knotel has reportedly stopped paying rent at several of its New York locations as it struggles with mounting financial issues.
The company has recently taken drastic steps to cut costs, and last month laid off or furloughed half its 400-person staff. However according to Business Insider, the company has a backlog of payments that goes back many months before the pandemic, putting it in a precarious position as the economy falters.
Knotel is behind on payments to some of its key partners, according to Business Insider, including brokerage firms CBRE and Cushman & Wakefield. It has also reportedly failed to pay April’s rent for locations including 61 Broadway, 40 Exchange Place and 5-9 Union Square West.
Ivy Chiou, a spokeswoman for Knotel, said in a statement that the company was “focused on balancing the interests of customers, partners, and investors, in efforts to build a sustainable, long-term business,” and was “taking these steps to ensure we are well-positioned for both current times of great crisis, as well as when business returns to a new normal.”
The company is also planning to return about 20 percent of its portfolio to landlords, according to Commercial Observer. The company framed the arrangement — to shed about 1 million square feet of office space — as a “business deal.”
Knotel is one of several office-space companies to recently lay off staff in recent weeks. Earlier this month, Industrious laid off 90 employees. WeWork also laid off 250 employees at the end of March. [Business Insider] — Sylvia Varnham O’Regan