Beleaguered IWG To Roll Out Smaller, Decentralized Coworking Platform
Coworking giant International Workplace Group said it is planning a new concept that will be smaller than its existing Spaces brand, but will also offer workstations designed with social distancing in mind.
The goal of the new platform is to attract workers who are reluctant to return to large, centralized locations from working at home, CoStar reports, but who want to work in an office setting at least part of the time. The platform's locations would allow companies to set up small satellite offices closer to their employees, so they wouldn't be obliged to take public transit to work.
The coronavirus pandemic has hit the coworking business hard, as workers want distance between themselves and others, and don't want to travel with strangers to get to a centralized workplace.
“The pandemic has precipitated a meaningful pullback in demand for this month-to-month space as tenants revert to the rent-free work from home alternative," ASB Real Estate Investments noted in a recent report on the impact of COVID-19 on the office market, including the coworking model.
IWG reported a loss of more than $300M during the first half of 2020, compared with a profit of $40M during the first half of 2019, as the pandemic cut into demand for coworking.
In the UK, IWG threatened late in September to declare its Regus subsidiary insolvent, in a move that has been widely interpreted as a strategy to goad its landlords into reducing rents. Regus' insolvency would be a first step in voiding over $1B in lease guarantees in its 500 locations worldwide.
Already about 100 work centers connected with Regus have filed for Chapter 11 bankruptcy in the United States. Those cases involve leases for space in Atlanta, Austin, Texas, Chicago, Miami, New York and Washington, D.C.
In New York, whose office market has been impacted particularly hard by the pandemic, IWG recently closed its business center at 747 Third Ave. in Manhattan, as well as 387 Park Ave. South, The Real Deal reports. All together 11 New York locations have been shuttered or put into bankruptcy.