More Landlords Chart Post-WeWork Path, Including A Residential Conversion
Landlords left with empty space thanks to WeWork’s mass rejection of leases are finding new uses for their properties in order to repair the damage of the coworking giant's demise.
One example is Richard Coles and Gary Tischler's Vanbarton Group, which is planning to convert a former WeWork at 980 Sixth Ave. into residential space, The Real Deal reports, citing an anonymous source. The plan, some years in the making as WeWork hit troubled times, is to turn 90K SF into around 100 apartments.
The building already has 380 residential units above the WeWork, as well as retail space. WeWork became a tenant there in 2017. Its space was one of almost 70 locations that WeWork immediately moved to terminate in its Chapter 11 bankruptcy last week. Vanbarton paid $316M in 2018 for the building and ran a rebranding and renovation campaign, TRD reported.
WeWork’s rejection of leases was concentrated in New York City, with a total of 38 rejected leases spread across 36 buildings. Major landlords like RFR, Nuveen and Chetrit Group were all listed as having millions in unsecured claims against the firm.
Finding a solution for WeWork's space has become an immediate concern for the owners of millions of square feet across the city, with the company looking to renegotiate or exit large chunks of its portfolio.
RXR Realty has taken back the 212K SF it leased to the company at 620 Sixth Ave., CoStar reported. The location was subleased to just two enterprise-level tenants, who now have signed direct deals with the landlord, an arrangement that was struck just before the bankruptcy.
“RXR has been a great partner in swiftly reaching a solution that prioritizes our members, ensuring no disruption for them and their business as they continue to occupy their space,” Peter Greenspan, WeWork’s global head of real estate, said in an emailed statement.
WeWork didn't comment on the Vanbarton property. RXR CEO Scott Rechler didn't immediately respond to Bisnow’s request for comment. Vanbarton declined to comment to TRD.
WeWork occupied less than 2% of the entire Manhattan office market but had more than 60% of its leases in Class-B and C properties. Coworking competitors have been eying the spaces, with Industrious having taken over more than a dozen former WeWork spaces already.
Some landlords have moved to put their own flex operators into the space. WeWork reached a deal with Tishman Speyer to hand back 217K SF at the Jacx in Long Island City, Bisnow reported last week. The company’s own flex operator, Studio by Tishman Speyer, will operate the space at 28-07 Jackson Ave.
WeWork’s lease with Tishman included a corporate guarantee and a letter of credit totaling $5M, according to Morningstar Credit. The 66 leases that WeWork requested to dump are tied to $1.85B in CMBS loans, according to KBRA Analytics.
