WeWork is still at work in Miami.
The co-working provider’s bankruptcy filing this week lists 69 outposts in the U.S. and Canada that the firm wants to immediately exit, but none of its five South Florida offices are on the chopping block.
While the influx of businesses to the tri-county region from late 2020 to early last year boosted demand for WeWork offices here and helped spare them from the guillotine, ripples from the firm’s financial woes still could reach South Florida, according to experts and sources with inside knowledge of the firm and its South Florida leases.
“The expectation is really that they are going to … maybe try to go back to the drawing board with new leases for perhaps some of them,” said Jaime Sturgis, a broker in Fort Lauderdale. “It’s going to be interesting how it plays out in South Florida in comparison to the other markets across the country.”
WeWork has five South Florida outposts, all in Miami-Dade County. In the leadup to the bankruptcy filing, WeWork had asked to renegotiate lease terms, including seeking lower rent, for at least one of the outposts, according to a source familiar with the matter.
Indeed, even before the bankruptcy, the company made no secret that it was struggling. In September, it announced a global landlord engagement process to renegotiate nearly all of its leases. Still, it didn’t clarify what it would seek in new lease terms, with some sources saying that a renegotiation could mean allowances for tenant improvements.
A company spokesperson didn’t specify whether WeWork is in talks with its Miami-Dade landlords, but stressed the health of the local market and WeWork’s long-term bet on the area.
“Miami is one of WeWork’s top markets in the country and we are fully committed to providing our members here with world-class, flexible workspace solutions for the long term,” the spokesperson said in a statement.
Landlords’ market
If WeWork opts to renegotiate Miami-Dade leases, it will likely bode better for the landlords than for the co-working firm, Sturgis said.
The local market remains stronger than elsewhere in the U.S., with continued demand and steady rent increases. That means that office owners may be wary to give in to any WeWork pleas for lower rent or smaller space, as landlords could find alternative tenants willing to sign at market-rate rents, Sturgis said.
“WeWork would probably have the hardest time getting traction with ownership in South Florida, in comparison to some of the other places in the U.S. that are experiencing more pain,” he said.
In 2017, WeWork took 33,600 square feet at 2222 Ponce de Leon Boulevard and another 57,000 square feet at 255 Giralda Place. Both buildings are part of the Giralda Place mixed-use complex in Coral Gables, developed by Heidi Eckes-Chantre, Kim Tabet and Christopher Brown.
Sources said these leases are the most likely to be downsized by consolidating the two offices into one, if the firm decides to reevaluate its Miami-Dade space.
The landlords’ broker declined comment.
WeWork has two outposts in the city of Miami. In Wynwood, the firm took roughly 30,000 square feet at Goldman Properties’ Wynwood Garage at 301 Northwest 26th Street in 2019.
At Brickell City Centre, WeWork took nearly 65,000 square feet at 78 Southwest Seventh Street in 2016. Northwood Investors owns the office space at the building.
It’s Azora Exan, a joint venture of Madrid-based Azora and Miami-based Exan Capital, that has the biggest exposure to WeWork. The firm fully leases Azora Exan’s 429 Lenox Avenue building in Miami Beach.
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“That’s a tough situation,” Sturgis said. “There’s always a risk with a single tenant. All of your eggs are in one basket.”
If WeWork’s Miami-Dade fortunes turn, and the firm decides to exit this lease, it could spell trouble for the landlord’s debt obligations, he said.
Azora Exan, Goldman and Northwood did not return requests for comment.