2 Denver Leases Rejected In WeWork’s Bankruptcy Filing

WeWork is rejecting two leases at Denver-area office buildings as part of its restructuring process, according to a document attached to the company’s bankruptcy filing obtained by Bisnow. 

WeWork said its lease rejection plan was “centered on value maximization” and that the company is working to break leases at properties that “provided limited or no benefit” to its operations. A few metrics WeWork used to make this determination include financial performance and market geography, according to the filing. 

The two Denver-area properties that WeWork listed as rejected are 2420 17th St., where the company had roughly 50K SF, and 3601 Walnut St. in the River North business district, which totaled roughly 45K SF. 

A subsidiary of MetLife owns the Walnut Street property, and BlackRock Capital owns the 17th Street building.

WeWork has been fighting lawsuits filed by landlords at both buildings over unpaid rent even though the company ceased operations in the spaces before it filed for bankruptcy, according to multiple news reports.

WeWork stopped using the location at 3601 Walnut St. in September 2019 and moved out of the 2420 17th St. location in July 2023, BusinessDen reported. However, landlords at both buildings have sued the company seeking unpaid rents and construction costs. It is unclear how WeWork’s bankruptcy filing will impact the litigation. 

“Denver remains a key market for WeWork and we are fully committed to providing our members here with world-class, flexible workspace solutions for the long term,” a WeWork spokesperson said via email Tuesday. “Our commitment to the city is unwavering as we continue to work collaboratively with our landlord partners, aiming to craft solutions that set all parties up for sustainable success.”

Landlords for the impacted Denver buildings didn't respond to requests for comment late Tuesday.

The 17th Street location is within Denver’s Downtown submarket, which has the second-highest average asking rent at $39.86 despite recording 381K SF of negative net absorption in Q3, according to CBRE.

The location on Walnut Street is in Denver’s River North submarket, which recorded a total vacancy of nearly 39% in Q3 and has the metro area’s highest average rent at $48.86 per SF. 

The move to restructure WeWork comes at a critical time for Denver’s coworking and office markets. In Q3, Denver’s downtown office vacancy rate reached 30% for the first time in its history. Meanwhile, the city’s coworking market grew by 1% year-over-year, reaching 200 locations totaling 3.2M SF, according to a report from CoworkingCafe, a subsidiary of Yardi. 

River North is one of the few areas in metro Denver with recent office deliveries. The Current at 3615 Delgany St. delivered more than 238K SF in Q3, and T3 River North at 3500 Blake St. is expected to add more than 230K SF of office space by Q2 2024. 

Experts previously told Bisnow that they don’t expect WeWork’s bankruptcy to have much of an impact on Denver’s office market, as the company accounts for less than 1% of the city’s overall office inventory. However, the impact to Denver’s coworking market may be more pronounced, according to CommercialEdge Director Peter Kolaczynski. 

WeWork’s impending bankruptcy was the cause of some short-term contraction in Denver’s coworking market during Q3, Kolaczynski said in a press release. The report says the city’s average coworking size declined from 16.5K SF in Q2 to roughly 16K SF in Q3, partly because of WeWork closing.  

“We expect some volatility in total square-footage to continue as those locations find their next use,” Kolaczynski said.