Short-term office company Regus put half a dozen of its New York City workcenters into bankruptcy as the company seeks Chapter 11 protection for upwards of 100 locations across the country.
Regus, which went through a bankruptcy restructuring in 2003 after the dot-com bubble burst, has put roughly 90 locations into Chapter 11 over the past six weeks, filings show.
The company has filed for six workcenters in Manhattan, Brooklyn and Long Island City in the past week.
Four of the locations are in Midtown: Paramount Group’s 1325 Sixth Avenue at 53rd Street, Levin Properties’ 1501 Broadway in Times Square, Brookfield Properties’ 424-434 West 33rd Street in Manhattan West and EQ Office’s 1740 Broadway at 56th Street.
The other centers are at Normandy Real Estate Partners’ 175 Pearl Street in Dumbo and Jamestown Properties’ Falchi Building at 31-00 47th Avenue in Long Island City.
A representative for Regus declined to comment. But in the half-year update from its parent company, Switzerland-based IWG, CEO Mark Dixon said the firm will be accelerating its plan to trim 4 percent of its global portfolio in response to Covid-19.
“Whilst the Covid-19 pandemic continues, we expect our third quarter to be particularly challenging. We therefore remain sharply focused on maximising further cost savings in the coming months,” he wrote in the August report, noting the company is working to build a large cash buffer.
Regus is the largest flex-office provider in the world, with about 10 times as many locations as WeWork. The company, founded in 1989, is largely seen as a barometer for the short-term office market, which has grown significantly in the past few years with WeWork’s expansion driven largely by SoftBank.
As recently as last fall, Dixon was crowing that Regus was thriving as its younger, upstart rival was experiencing growing pains.
But the coronavirus has had a severe impact on the short-term office market, with a number of smaller players fizzling out. Regus’ bankruptcy filings are the most significant indicator yet that the pandemic pain may start to reach the industry’s highest levels.
The majority of the sites Regus put into bankruptcy are in urban cores including New York, Chicago and San Francisco — areas hard hit by the virus. The number of centers in Chapter 11 represent about 2 percent of the 1,000 locations the company has in the United States and Canada.
The company believes its clients will want to work in suburban offices closer to home, rather than in dense business centers.
Nearly $13 billion worth of commercial-mortgage backed securities loans have exposure to Regus locations, according to a recent report from Kroll Bonds Ratings Agency.