IWG looking to close 20% of flex-office NYC portfolio
Company shuttered its flagship Regus work center on Third Ave.
Short-term office provider IWG is looking to close at least a fifth of its work centers in New York City as the parent company prepares to throw its Regus subsidiary into bankruptcy in the U.K.
Regus recently closed what it called its flagship business center in Midtown East at the 39-story office tower 747 Third Avenue, sources familiar with the property told The Real Deal. The company also closed a center in Midtown South at 387 Park Avenue South, sources said. And Regus on Friday filed for bankruptcy protection for a center nearby at 287 Park Avenue South, records from Delaware bankruptcy court show.
A spokesperson for U.K.-based IWG, headed by CEO Mark Dixon, declined to comment on the New York City closings, but sent a statement saying the pandemic “is a black swan event and it has severely impacted our business and presented us with unforeseen challenges.”
Representatives for the owner of 747 Third Avenue, Sage Realty, and 387 Park Avenue South owner TF Cornerstone declined to comment.
In addition to those closures, IWG has also shuttered another Regus and a workspace under its Spaces brand in Manhattan, a source told TRD. Those moves, combined with six New York City work centers that Regus and Spaces put into bankruptcy in September, make a total of 11 Big Apple centers that have either closed or gone into bankruptcy.
That’s roughly one fifth of the 52 centers IWG ran in the city before the coronavirus pandemic took hold, prompting remote working. And it’s not clear if that’s the extent of the locations on the chopping block or if there are more to come.
As of last week, Regus had put 103 work centers across the United States into bankruptcy. And multiple news reports last month said Regus would be filing for bankruptcy in the U.K.
In response to the U.K. bankruptcy filing, the IWG spokesperson said Regus doesn’t operate the company’s work centers, but instead supplies rental guarantees to about 15 percent of IWG’s global network.
“In any restructuring of a guarantor, none of our operations are affected,” the spokesperson wrote in an email. “As the business has expanded in recent years to meet the increased global demand for distributed working, so has the value of the guarantees.”
IWG earlier this year said it plans to close 4 percent of its global portfolio as a result of the pandemic, but didn’t give specifics on how that would impact individual markets. It looks like it’s closing a higher percentage in New York City, where the short-term office market has taken a big hit.
In New York, Regus appears to have closed several centers without filing for bankruptcy. In some of the cases where it has filed, sources said the company is working with landlords to negotiate concessions on leases.