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New Flexible Office Leases Could Spell Trouble For Landlords

Both IWG and WeWork have announced closures for some of its locations in Australia in order to focus on suburban and rural communities. This move is being echoed by many flexible office operators as remote workers demand for offices closer to their homes.

Recently, IWG’s Regus brand filed for Chapter 11 bankruptcy for several of its locations in the U.S., allowing it time to renegotiate its leases with landlords or simply close spaces that aren’t working.

The restructuring of leases has left landlords exposed to these operators. For instance, Kroll Bond Rating Agency found 157 properties that served as collateral for $13 billion in loans with exposure to Regus.

Kroll Analysts also stated that IWG seeking rent deferrals and lease renegotiations could allow the company to walk away from rent obligations, which could be detrimental to landlords.

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In the UK, IWG has also threatened to put Regus into insolvency, potentially leading to £790 million of leases being dissolved.

However, the stark difference between IWG and WeWork is that the former was profitable last year. Still, the company saw pre-tax loss of £176 million in the first half of this year.

In short, remote working has caused the flexible workspace industry to completely uproot its normal operations in an effort to stay afloat and boost revenue.

Some operators are banking on the fact that major companies looking to de-densify their main offices will look to flexible workspaces to disperse their workforce.

ABOUT Aayat Ali
Aayat Ali

Aayat is an editor for the Daily Digest based out of Kentucky. She has worked with local coworking spaces since August of 2017 and enjoys taking her firsthand knowledge to write about the fascinating, constantly evolving world of flexible workspaces. Feel free to reach out to her at [email protected] View all posts by Aayat Ali

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