WeWork has slashed its rents across the country as workers continue to avoid going into offices.
The New York-based flex-office provider dropped the price of its rental fees in November and in January by an average of about 10 percent, according to data provided to Bloomberg News. In some places, rents fell by as much as 25 percent.
The company reduced rents by 15 to 20 percent in Austin, Texas, Boston, Denver and New York City. In Chicago, rents were reduced by 24 percent; in Detroit, prices fell by 25 percent.
WeWork has sought to cut costs since the company was bailed out by its parent company SoftBank Group in 2019. The flex-space provider botched its attempt to go public and ousted its co-founder, Adam Neumann — though he left with a hefty severance package.
WeWork’s new CEO Sandeep Mathrani claims that the company has renegotiated many of its leases during the pandemic. He also said that WeWork will be profitable at the end of 2021.
In recent months, the company has closed and exited four locations in Midtown, Soho and the Meatpacking District. It also recently closed one of its oldest locations in the Financial District, Bisnow reported.
Co-working companies have struggled since the onset of the pandemic. In addition to working remotely, employees are concerned about contracting the virus in open-plan office spaces.
And unlike traditional offices where tenants are locked into a long-term contract with the landlord, many flex-office providers have short-term contracts with their tenants. One of WeWork’s competitors, Knotel, has already filed for bankruptcy, claiming that tenants have stopped paying rent. It’s due to be acquired by Newmark Group.
[Bloomberg News] — Keith Larsen