WeWork Gives Up 750K SF In London As It Eyes End Of Bankruptcy
Flexible office giant WeWork has closed or is in talks to close London offices totalling 750K SF over the last six months as part of efforts to make itself profitable, research from Bisnow can reveal.
WeWork has handed back 19 London locations since September, reducing the space it occupies in the UK capital by 750K SF and shrinking its footprint to 2.5M SF. The figure was derived using CoStar data and information on WeWork’s website about which locations are no longer active. It now operates from 30 London locations.
WeWork is in Chapter 11 bankruptcy in the U.S., but it is not subject to any insolvency proceedings in the UK. Even so, it has been looking to cut its rental outlay in markets across the world.
In London, it has closed almost a third of its space.
The latest raft of London closures include 30 Stamford Street in Southbank, 15 Bishopsgate and 127 Finsbury Pavement in the City, 22 Long Acre in the West End, and 76 Clerkenwell Road in Farringdon. The tenants at the Farringdon building have stayed in place, paying rent directly to the landlord.
“As part of WeWork’s efforts to achieve a sustainable capital structure and profitable business to serve our members for the long term, we have made the decision to stop operations at a handful of London locations,” a spokeswoman for WeWork said.
“We have offered affected members the option to relocate, with our support, to our other locations in the city, and regret any inconvenience this may cause. We look forward to continuing to provide our members with flexible space solutions across our other locations in the capital.”
The interactive map below outlines which WeWork London locations have closed since September, along with data on the size of the space occupied, the rent paid and the owner of the affected buildings.
Last week, an office building owned by a fund affiliated with WeWork, 51 Eastcheap in the City of London, went into receivership after a loan from Deutsche Bank breached covenants. The plan is for WeWork to continue occupying the 71K SF location.
WeWork said this week that it aims to exit bankruptcy by the end of May, with the “majority” of its rightsizing having been completed. The future of around 10% of WeWork’s global portfolio, or around 59 locations, remains in flux.
The company most recently said it had reached agreements with landlords to amend 150 leases, although some of the contracts have yet to be executed. It will maintain its leases at another 150 locations without changes to lease terms, Bisnow reported. Another roughly 150 locations will be shuttered through lease rejections or exits negotiated with landlords.
Those numbers are in line with figures first reported by Bisnow from a restructuring plan in November that showed WeWork could close 163 out of 509 locations globally.
If WeWork does emerge from bankruptcy, it will be owned by its creditors, who will take control of the company through a debt-for-equity swap. The largest owner will be SoftBank, the tech investor that has pumped more than $12B into WeWork so far.
The company could list on the stock market again post-bankruptcy.
