WeWork abandons big Manhattan office lease

The flexible-office provider has sought to renegotiate leases across its real estate portfolio

TRD New York /
Jun.June 26, 2020 10:08 AM
A photo illustration of WeWork CEO Sandeep Mathrani and 149 Madison Avenue (Google Maps, Getty)

A photo illustration of WeWork CEO Sandeep Mathrani and 149 Madison Avenue (Google Maps, Getty)

WeWork is scrapping plans to move into a major Manhattan office it agreed to lease nearly two years ago.

The struggling co-working firm was set to move into a 115,000-square-foot spread at Columbia Property Trust’s 149 Madison Avenue in Midtown South this year. Terminating the deal may now cost WeWork millions, Business Insider reported. WeWork had planned to retrofit the office, for which the landlord set aside $15.9 million.

As the coronavirus spread, offices across the country sat empty for the better part of the last three months, putting pressure on landlords and tenants alike. WeWork has sought to renegotiate rents and lower costs in a bid to turn around its real estate portfolio, as flexible-office space firms struggle to meet their obligations. CEO Sandeep Mathrani said the firm was rethinking nearly 20 percent of its leases.

In May, IBM announced it was leaving a 70,000-square-foot space it leases from WeWork at 88 University Place, although the technology company said the move was unrelated to the coronavirus. The IBM deal had marked a milestone for WeWork, as it sought to appeal to mid- to large-sized companies, not just freelancers.

In 2019, the Onni Group secured the co-working giant as an anchor tenant following its $628 million acquisition of the Wilshire Courtyard office complex in Los Angeles — but WeWork had not paid rent on its 335,000-square-foot lease as expected in May. The lease ultimately sent Onni into default on the property’s loan this month.

Earlier on during the coronavirus outbreak, WeWork faced a backlash from its renters, who called the company’s continued charging of fees during the pandemic “unlawful.” The company said it must keep offices open for those of its users considered essential.

Last month, WeWork’s valuation fell to $2.9 billion, a far cry from $47 billion a year ago. [Business Insider] — Georgia Kromrei


Related Articles

arrow_forward_ios
Kimberly Ross (Credit: Chubb)

WeWork taps oil exec as new CFO

WeWork taps oil exec as new CFO
Former WeWork CEO Adam Neumann (Credit: Getty Images, iStock)

WeWork founder scrambled for $100M loan before $1.7B bailout

WeWork founder scrambled for $100M loan before $1.7B bailout
SoftBank to take control of WeWork at less than $8B valuation

SoftBank to take control of WeWork at less than $8B valuation

SoftBank to take control of WeWork at less than $8B valuation
Compass CEO Robert Reffkin and WeWork's Adam Neumann 

Like WeWork, Compass touts tech and culture. Are the companies different enough?

Like WeWork, Compass touts tech and culture. Are the companies different enough?
Marcelo Claure and Softbank CEO Masayoshi Son (left) (Credit: Linkedin, iStock, Pixabay)

SoftBank’s problem solver faces his biggest challenge yet: WeWork

SoftBank’s problem solver faces his biggest challenge yet: WeWork
WeWork co-CEOs Artie Minson, Sebastian Gunningham and Jones CEO Omri Stern (Credit: LinkedIn)

WeWork is investing again with fundraise for proptech

WeWork is investing again with fundraise for proptech
WeWork's Artie Minson, Miguel McKelvey, and Sebastian Gunningham (Credit: Getty Images)

Reassurances, apologies and layoffs: Inside WeWork’s first all-hands post Neumann

Reassurances, apologies and layoffs: Inside WeWork’s first all-hands post Neumann
General view of WeWork Weihai Road in Shanghai (Credit: Getty Images)

WeWork considers freezing China expansion plans

WeWork considers freezing China expansion plans
arrow_forward_ios

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

Loading...