The trading of WeWork’s shares halted before the market opened on Monday, and the headlines have investors preparing for a possible bankruptcy that could have far-reaching implications for the coworking and commercial real estate markets.
Before the halt, WeWork’s stock had surged by 35%, despite the company ceasing rent payments at several major properties. The Monday morning trading halt was not entirely unexpected as speculation about WeWork bracing for a chapter 11 bankruptcy filing spread last week.
The potential bankruptcy of WeWork could mark the beginning of a major change in commercial real estate markets — particularly in major urban centers like New York City where WeWork maintains a substantial presence.
According to Investor Place, the news has not only affected commercial real estate speculation, but also raises questions for trends in residential markets. In New York, for instance, the high cost of housing persists. The city’s response, which includes changes to zoning codes to allow the conversion of office spaces into apartments, is a direct reaction to these market forces.
The unfolding situation with WeWork could be the precursor to a larger transformation as the market seeks to adapt to hybrid and remote work trends. This could involve repurposing office spaces and rethinking how and where we work, presenting opportunities for innovation in real estate and work culture.
The halt of WeWork’s shares reflects how the company’s financial struggles have been mounting over the past year. WeWork has experienced multiple leadership switch-ups this year, a 1-for-40 reverse stock split, and mounting lawsuits. The company’s struggles can be traced back to a failed IPO attempt in 2019 — which revealed larger-than-expected losses. Despite eventually going public two years later at a reduced valuation of about $9 billion, the company has continued to face financial difficulties ever since.
As the dust settles, the challenge and opportunity will lie in how quickly and effectively the market can pivot to address the changing needs of the workforce and the spaces they occupy.