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WeWork Sues Boston, D.C. Landlords Over Allegedly Unreimbursed TIAs

WeWork is suing to recoup a total of $18.7M it says landlords in downtown Boston and Washington, D.C., owe in reimbursement for tenant improvement bills.

The coworking giant filed suit in Suffolk County Superior Court seeking $11.9M in allegedly unpaid renovation costs it claims it is contractually entitled to from Boston owner Rockpoint Group, the Boston Business Journal first reported. WeWork has also sued an affiliate of The Meridian Group for $6.8M over tenant improvement allowances it says it was promised in a D.C. lease.

100 Summer St. in Boston, where WeWork alleges owner Rockpoint Group has not reimbursed tenant improvement costs it is owed.

WeWork occupies three floors at 100 Summer St. in Boston, which Rockpoint bought for $800M a year ago. But WeWork says its 117K SF lease, which was originally with then-owner EQ Office, stipulated that the flexible office space provider was entitled to $14M in construction on its floors. It claims it spent $13.3M on TIAs, $1.47M of which has been repaid. 

Similarly, WeWork filed suit against Meridian affiliate TMG 800 K Street LLC at the beginning of September, the Washington Business Journal reports. The company alleges that the $6.8M in TIAs it seeks reimbursement for was promised as part of its 66.5K SF lease at 700 K St. NW.

WeWork’s website shows that the D.C. location is open with enhanced cleaning services and enhanced HVAC standards, and the Boston location is available for “pre-opening rates” with the same amenities.

WeWork is not in a position to forget nearly $19M. The coronavirus pandemic has been hard on the office sector, but particularly so on coworking firms like WeWork, which was in dire straits and aiming to exit some 100 leases even before the pandemic. 

Since the pandemic wreaked havoc on the sector, WeWork has offered big rent discounts for long-term tenants, backed out of more leases and been hit with discrimination lawsuits. It did recently secure a $1.1B commitment from SoftBank, and its CEO, Sandeep Mathrani, told Bisnow this summer that it expects to be profitable at some point in 2021.