Despite its recent grievances, including laying off almost 20% of its employees and having to be bailed out, WeWork is still growing.
The final quarter of 2019 saw WeWork leasing 441,000 square feet in Manhattan. By the end of 2019, it was leasing a total of 8.2 million square feet in the area.
While last year marked a record year for WeWork as far as square footage goes, it is less likely to see as many deals in 2020. In fact, it is only expected to add just a little over 2 million square feet this year, as opposed to its 7.7 million last year.
Marcelo Claure, who was appointed executive chairman after the resignation of former CEO Adam Neumann, outlined a six-point plan to profitability back in November that included focusing on its core markets like New York and core business of office rental.
Last month, it was reported that WeWork was trying to get out of numerous leases due to its occupancy declining to 79% in the third quarter of 2019.
The addition of new locations at the end of 2019 will likely lead them to more financial woes, especially as new spaces are less profitable than existing ones.
“If they sign a lease with 2019 rent and 2019 turns out to be the top of the market, and we have a recession in 2020 or 2021 and the rent goes down — the short-term tenants are going to have that benefit of cheaper rent,” said Paul Leonard, a managing consultant at CoStar.