Bankrupt WeWork will exit a landmark office location in Downtown Los Angeles.
The New York-based co-working firm is vacating nearly 92,000 square feet of offices after failing to cut a deal with the manager of the Gas Company Tower at 555 West Fifth Street, Bisnow and the Commercial Observer reported. The office will close at the end of the month.
The closure comes after unsuccessful talks with the landlord, a court-appointed receiver that took control of the property from Brookfield in April.
In November, the startup once valued at $47 billion filed for Chapter 11 bankruptcy protection, allowing it to get out of money-losing leases without paying much, if anything, to the landlords. Other creditors stand to get pennies on the dollar.
Since then, WeWork has faced or made nearly 1,300 court filings, while filing notice of its intent to reject 92 of its leases, according to a spokesperson. The firm also said it has made “substantial progress” in its lease renegotiations, saving more than $1.5 billion.
WeWork has reconfigured a handful of leases in Washington, D.C., Atlanta and Portland, Oregon, according to Bisnow. It’s now on the hunt for new financing.
But the company withheld more than $30 million of rent in January at other properties where it hasn’t reached such deals.
In Los Angeles, negotiations to cut a deal for offices at the 52-story skyscraper landed on the pavement.
“As part of WeWork’s strategic restructuring efforts, we made the difficult decision to end our operations at Gas Company Tower,” an unidentified WeWork spokesperson said in a statement to the Observer. “Los Angeles remains a priority market for WeWork and we look forward to continuing to provide members with flexible workspace solutions at our other locations in the city.”
The 1.4 million-square-foot tower went into receivership in April after a Brookfield-managed fund defaulted on $748 million in loans tied to the property and to 777 Tower. The value of the Gas Company Tower plunged to $270 million last summer, from $632 million in 2021.
Last summer, the City of L.A. inked a deal for nearly 310,000 square feet for 15 years at The Gas Company Tower. However, the building’s second-largest tenant, law firm Sidley Austin, is set to vacate the tower in 2026 after more than three decades.
— Dana Bartholomew
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