WeWork UK Escapes Bankruptcy, But Lease Talks Continue As 10 Locations Shut Or Prepare To
WeWork’s UK division isn't part of the bankruptcy proceedings affecting its U.S. parent company, but lease negotiations with UK landlords are continuing — and the flexible office firm has quietly shut or started talks to shut over 10 London locations in the past two months, Bisnow can reveal.
WeWork filed for Chapter 11 bankruptcy protection on Monday, though its UK and Ireland business is separate from this process, with no plans to appoint administrators or receivers to WeWork International, the holding company for the UK and Irish operations.
“As previously announced, we are in active conversations with hundreds of landlords globally to address high-cost and inflexible lease terms in order to achieve a sustainable business model that will serve our members around the world for many years to come,” a WeWork spokesperson told Bisnow in an emailed statement.
“As part of this process, we have made the decision to stop operating at certain locations in the UK, and we’re pleased to share that we have been able to reach mutually beneficial agreements with our landlord partners at a number of these locations. London, the UK and Ireland remain key markets for WeWork, and we are fully committed to providing our members with the signature member experience they expect, for the long term.”
Negotiations with landlords on rent cuts in the UK and Ireland are continuing.
In August, WeWork contacted every one of its more than 400 landlords around the globe to seek rent cuts. WeWork went into bankruptcy because its costs are higher than its revenue, with its biggest outlay being rents. The company signed long leases at high rents in the period between 2015 and 2019 to grow as fast as possible, but it was unable to reach the occupancy level to make a profit.
In the UK, landlords have been asked to cut WeWork’s rent by up to 50%, React News reported. As outlined in its bankruptcy filing, the company needs to cut its rent bill, and the bigger the rent concessions it wins from landlords, the fewer locations it would have to close.
WeWork had 509 locations around the world as of 12 October, it said in its filing, adding that depending on how rent negotiations went, it could close 163 of those. It identified 105 as “never keeps” targeted for definite closure.
Of those 163, 120 are in the U.S. and Canada, with a further 43 in the rest of the world. WeWork is asking the court to allow it to exit more than 60 leases in the U.S. and hand the keys back to landlords.
U.S. bankruptcy protection does not apply to WeWork’s UK business, and it carries no weight on that side of the Atlantic.
But an analysis by Bisnow found that the company has quietly shut or begun talks with landlords at about 10 locations in London in the past two months, with at least one more closure likely to come. The locations total 193K SF.
In September, Bisnow mapped WeWork’s London portfolio, cross-referencing CoStar data with the sites listed on the company’s website.
Since then, 10 locations are no longer listed on the company website, with Google flagging some as permanently closed. The 10 locations no longer listed are 12 Moorgate, 1 Lloyds Avenue, Discovery House and 120 Old Broad Street in the City; Linen Court in Shoreditch; 20 Upper Ground on the Southbank; 52 Bedford Row, 165 Fleet Street and 12 Russell Square in Midtown; and 8 Meard Street in Soho.
Bisnow’s interactive map shows all of WeWork's open London locations.
The Telegraph reported in August that WeWork’s UK lease liabilities total around £3B. WeWork leased less than 35K SF at all of the closed locations.
WeWork has also forfeited its lease on the 59K SF it occupies at Helical’s The Bower scheme in Shoreditch, although it still occupies the building on a short-term license agreement.
