WeWork Faces Eviction Lawsuit After Vacating Chicago Loop Site
WeWork has been slapped with a $360K eviction lawsuit after allegedly not paying rent at its largest Loop location, one of 40 underperforming sites across the U.S. to be closed down by the coworking giant in late 2022.
In a lawsuit filed in Cook County Circuit Court last month, a joint venture headed by German investor Commerz Real AG seeks to regain possession of the four-story 125 South Clark St. location vacated by WeWork ahead of its lease running out in 2033. It is also asking to collect unpaid rent and damages.
The 112K SF location was shuttered in November, one of more than three dozen singled out for closure because they didn't meet the company's design criteria, were obsolete or were in a market with “oversupply,” according to WeWork CEO Sandeep Mathrani.
A WeWork spokesperson declined to comment to Crain’s Chicago Business, which first reported the news. Commerz Real issued a statement reiterating WeWork had 10 more years on its lease at the National, the 601K SF former Chicago Public Schools headquarters it purchased for about $197M in 2018.
WeWork leased its space there in 2015 and was the building’s largest tenant, Crain’s reported.
“WeWork is in a valid lease agreement with a term ending in 2033,” Commerz Real said in the statement. “Several rental payments are outstanding — which WeWork says it will not pay, nor continue to comply with their contractual obligations going forward. As a trustee, we act in the interests of the funds’ investors — private individuals — by filing the eviction lawsuit.”
WeWork’s departure marks another hit for Chicago’s downtown office market, which is already struggling with record vacancy that rose to 22.4% in the first quarter. It comes a year after WeWork also gave up its 50K SF 332 South Michigan Ave. location, paying a termination fee to exit the lease, and as a similar dispute at 600 West Jackson Blvd. involving WeWork rival Industrious makes its way through the court system, Crain’s reported.
Industrious closed that location in 2020 and was sued by its landlord over $4M in unpaid rent on a lease that ran through 2030.
Last week, WeWork and Rhone Group defaulted on a $240M loan on a 20-story office tower in San Francisco’s Financial District.
WeWork has seen its stock price dip below $1 per share after losing hundreds of millions of dollars per quarter, leading investor SoftBank to consider a financial restructuring plan. Since 2020, it has fully exited 250 leases, a statistic the company has painted as a move toward its “optimization” effort of keeping locations where it sees the most value.
