WeWork is getting the boot from River North landlord Jaime “Jay” Javors as the struggling co-working firm seeks to reorganize its leases in bankruptcy court and its LaSalle Street building risks becoming totally vacant.
An entity controlled by Javors that owns the 12-story, 172,000-square-foot asset at 448 North LaSalle is suing to evict WeWork, alleging it’s behind on nearly $300,000 in rent, according to a complaint filed late last month in Cook County court.
The co-working firm — which is seeking bankruptcy protection in a bid to reorganize certain office leases across the globe after its valuation got clobbered by investors leading up to its initial public offering in 2021 — opened a 62,000-square-foot space in the Javors-owned building on a 15-year lease set to run through 2036. Its rents started at $2.4 million annually in the first year and grew to $3.4 million in the final year, the lawsuit shows.
A WeWork spokesperson declined to comment on the litigation other than to say the suit is subject to an automatic stay afforded to companies in Chapter 11 court proceedings and to affirm the company wants to keep a Chicago footprint, calling the city a “key market for WeWork” and saying its “commitment to the city is unwavering” as it works through its lease renegotiations with landlords.
A lawyer for the landlord declined to comment.
Javors’ entity is pursuing eviction as the landlord itself faces its own bizarre lawsuit brought by Vancouver, British Columbia-based real estate investor QuadReal. It alleges that Tom Scott, the CEO of Chicago-based multifamily developer CA Ventures, also has an ownership interest in the office building and got caught up in self-dealing with an office lease between the landlord and a joint venture of QuadReal and CA Ventures.
If WeWork is evicted, the LaSalle Street building will be totally empty, because CA Ventures never moved into its space despite announcing a 70,000-square-foot lease at the property in 2020 that would put its headquarters there.
QuadReal, however, claims Scott breached his fiduciary duty to the partnership between CA Ventures and QuadReal. The Canadian firm alleges Scott put their partnership on the hook to pay rent for an entire seven-floor lease in the event of a lease default by any of the CA Ventures entities renting office space in the building, even though the QuadReal student housing partnership only would occupy one floor.
Earlier this year, Javors’ entity sued to evict the various CA Ventures entities from the building, and alleged that the one that had ties to QuadReal was responsible to pay the entirety of the late rent and the rest of the lease, according to QuadReal. That eviction case, however, was dismissed for now as the QuadReal allegations against Scott and Javors play out in court. It was the second eviction case the Javors-controlled entity had filed against CA Ventures entities this year, as an earlier claim by the landlord was settled in June.
Elsewhere in Chicago, WeWork is reportedly planning to reject its lease at 125 South Clark Street, where the coworking firm shut a 112,000-square-foot space earlier this year then got sued in an eviction complaint by Germany-based landlord Commerz Real AG. Plus, Michael Alter, a longtime commercial real estate player and owner of the WNBA’s Chicago Sky, is suing WeWork to recover a lease termination fee that Alter says the firm stopped paying for exiting 175,000 square feet at 20 West Kinzie Street 10 years before its scheduled lease expiration.
WeWork owes nearly $12 million to the Alter entity that owns the 17-story Kinzie Street building, according to its bankruptcy case, while Alter’s lawsuit doesn’t specify an amount it’s seeking to recover from the former tenant.
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