Knotel may slash its global portfolio by 60%

Flex-office provider has been beset by layoffs and lawsuits this year

National /
Nov.November 11, 2020 05:55 PM
Knotel CEO Amol Sarva (iStock)

Knotel CEO Amol Sarva (iStock)

Knotel once hoped to be the next WeWork. And as the pandemic rages on, it’s facing similar headwinds as its co-working rival.

The flex office provider is looking to trim 60 percent of its 4.8 million-square-foot global portfolio, and slash its leases in the U.S. and Canada from 3.4 million square feet to just 500,000 square feet, Business Insider reported.

Knotel’s goal is to lower its rent obligations from $15 million per month to $2 million and bring its North American revenue up to $10 million annually.

The company is also reassessing its business model, according to BI. Instead of paying rent to its landlords, it may shift to management agreements wherein it operates the space on the landlord’s behalf, thus sharing in the profits.

Knotel was valued at $1.6 billion in August 2019, but is thought to be worth substantially less now. Its problems — including late payments to contractors and high vacancy rates — predate the pandemic. In January, Knotel axed 20 percent of its staff, the first of three rounds of layoffs in 2020. Most recently, about 20 workers were let go, leaving its headcount at 250.

As Covid persisted, Knotel was hit with lawsuits and threats of eviction due to unpaid rent.

Other flex-office providers have had similar struggles. Breather, a company specializing in renting out small spaces on a short-term basis, has contracted investment bank Moelis and is considering its options for a possible sale or outside investment. And WeWork has recently moved to threatening non-paying members with collections letters.

[BI] — Raji Pandya


Related Articles

arrow_forward_ios
From left: Oak Row Equities' David Weitz and Erik Rutter with Edgewater
Oak Row Equities plans 400-unit apartment, office tower in Edgewater
Oak Row Equities plans 400-unit apartment, office tower in Edgewater
Google Street View of the properties at 551 Southeast Eighth Street and 551 Southeast Fifth Avenue in Delray Beach with CDS International Holdings founder Carl DeSantis (Google Maps, CDS Holdings)
Celsius energy drink investor Carl DeSantis pays $25M for Delray Beach offices
Celsius energy drink investor Carl DeSantis pays $25M for Delray Beach offices
From left: Rockpoint Group's co-founders Bill Walton and Keith Gelb in front of 1221 Brickell Avenue (Rockpoint Group, Google Maps, iStock)
Rockpoint sells 1221 Brickell office tower for $287M, marking a six-year record price
Rockpoint sells 1221 Brickell office tower for $287M, marking a six-year record price
Starwood's Barry Sternlicht and Don Peebles III (Getty, Starwood, Integra, Comras JV)
Miami Beach gives green light to controversial Peebles, Sternlicht office projects near Lincoln Road
Miami Beach gives green light to controversial Peebles, Sternlicht office projects near Lincoln Road
Michael Shvo and Norman Foster and renderings of The Alton (Getty, Wikipedia, Foster + Partners)
Michael Shvo moves forward with $200M Norman Foster-designed office development in Miami Beach
Michael Shvo moves forward with $200M Norman Foster-designed office development in Miami Beach
R & B Realty’s Shelby Rosenberg and The Gateway at Wynwood (R & B Realty Group, iStock)
Lease roundup: The Gateway at Wynwood scores three new tenants
Lease roundup: The Gateway at Wynwood scores three new tenants
TPA's J Bradford Smith with conceptual site plan for Edison Pembroke (TPA,Nelson)
Developer switches office park plan in Pembroke Pines to mixed-use apartment project
Developer switches office park plan in Pembroke Pines to mixed-use apartment project
(left to right) Nuveen's Mike Nuveen with 800 Waterford Way and Pebb Enterprises' Ian Weiner with 5355 Town Center Road (CoStar, Nuveen, TVS Design, Pebb)
Lease roundup: Nuveen nabs fintech tenant in Miami, Brookfield scores 20 leases at Boca’s Mizner Park
Lease roundup: Nuveen nabs fintech tenant in Miami, Brookfield scores 20 leases at Boca’s Mizner Park
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...