WeWork is saying goodbye to Hollywood.
The company is shutting its only location in Hollywood at 1601 Vine Street by the end of the month, sources familiar with the matter told The Real Deal. WeWork declined to comment.
J.H. Snyder developed the building in 2017 and still owns it — at least for now. The L.A.-based investment firm put the property up for sale in August, according to a listing from JLL. J.H. Snyder did not respond to a request for comment.
The firm will now have to sell a mostly empty building — the ground-floor retail space is still leased to City National Bank — amid rising interest rates, which have forced many commercial investors onto the sidelines.
WeWork holds a lease on the property through September 2030, the JLL listing said. The company has not yet put its space up for sublease, though it could have elected to terminate its lease.
WeWork leased the entirety of the eight-story, 116,000-square-foot building in 2017, shortly after the building was completed, according to lease documents filed with L.A. County and a source familiar with the deal. About three floors were offered to individual members, as of the beginning of this month.
It’s not the first property in L.A. WeWork has given up, as it has drastically cut costs in an effort to become profitable under its new CEO Sandeep Mathrani. The company and brainchild of ousted CEO Adam Neumann lost $635 million in the second quarter and has more than $2 billion in short-term debt.
Last year, the coworking firm gave up one of its three West Hollywood locations at 925 North La Brea Boulevard, where it also leased about 48,000 square feet through 2029. Spaces, a coworking firm owned by IWG, eventually took over about two-thirds of the lease.
WeWork terminated leases for 18 open locations and four pre-leased properties from January through June of this year, according to SEC filings. Since 2019, it has terminated deals for 234 locations across the world.
The coworking firm has struggled to fill its spaces during the pandemic, the same as many other office landlords. About 45 percent of WeWork’s consolidated office space was occupied in the fourth quarter of 2020. That number increased to 70 percent by the second quarter of this year, according to financial filings.
WeWork’s members, if they choose to continue their business with the company, will now have to choose a different location, though the nearest aren’t all that close to Hollywood. The closest WeWork properties are at the Pacific Design Center in West Hollywood or on the other side of the 405 freeway in the San Fernando Valley markets of Burbank and North Hollywood.
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