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Big markets for coworking spaces are becoming increasingly competitive for workspace providers — with WeWork’s recent financial challenges creating opportunities for rivals to expand their presence.
According to a report published by CoStar, WeWork recently filed court documents revealing a substantial loss of $153.7 million in January 2024 alone, primarily due to high operating costs and lease obligations. These significant financial challenges have forced WeWork to adopt a restructuring plan that focuses on key markets while downsizing its global portfolio.
Now, a third of WeWork’s vacated locations have been backfilled, often by competing coworking firms such as IWG, Industrious, and Studio by Tishman Speyer, according to a report published by BisNow.
New tenants are reported to have taken over approximately 914K square feet of the space WeWork left behind in 2023, according to updated CoStar Data. Some of the tenants include companies like Sony Pictures, Palantir, Boeing, Moderna, Current, Roky — all of which have moved into some of the vacated WeWork locations.
Since 2016, WeWork has reportedly vacated 8.9 million square feet of office space across the U.S., with about 3 million square feet being re-leased.
WeWork’s financial struggles are also reflected by its long-term lease obligations totaling $4.4 billion and immediate lease obligations totaling a reported $163.8 million as of January 2024. Moreover, the company’s cash balance has decreased, and it is actively working to renegotiate terms with landlords to reduce lease obligations and costs.
Amid these massive lease negotiations, a committee representing unsecured creditors is seeking bankruptcy court approval to sue WeWork’s majority shareholder, SoftBank, in an effort to recover funds for landlords and other creditors. The committee accuses SoftBank and a coalition of creditors, who hold 62% of WeWork’s unsecured notes, of orchestrating a debt restructuring in May 2023. This move was allegedly designed to minimize their losses and improve their standing in WeWork’s financial hierarchy — all while being fully aware of the company’s impending bankruptcy.
Despite nearly two-thirds of the space WeWork has vacated remaining empty, the company could exit about 100 more leases and is negotiating with approximately 400 landlords on new terms, according to CoStar. The ongoing WeWork struggles are reshaping the coworking sector by creating opportunities for many of its top competitors.
