One month after becoming an office landlord with its purchase of a 31-story Northern Virginia tower, real estate data giant CoStar Group is seeking to recover rent from one of its most high-profile tenants.
CoStar is pushing to receive over $3M of unpaid rent from WeWork, according to a motion filed Friday with the court overseeing WeWork’s bankruptcy case.
:quality(75)){kind=logo}
CoStar in February purchased the Central Place tower at 1201 Wilson Blvd. in Arlington's Rosslyn neighborhood for $339M. The company plans to occupy 150K SF of the 552K SF building for its own headquarters, relocating it across the river from D.C.
The building, one of the region's tallest, was developed in 2018 by JBG Smith, which owned it along with PGIM Real Estate before selling to CoStar. The building is anchored by Gartner, and flexible office provider Convene also occupies two floors.
WeWork, which filed for bankruptcy in November, has been located at the property since 2019 when it took 83K SF across four floors. The coworking space has remained open as the company has closed many others in the D.C. region and beyond over the last few years.
The company owes $1.5M in deferred rent from 2023, another $1.2M in unpaid rent from the first three months of this year, and $320K in unpaid rent from the month it filed for bankruptcy, according to CoStar's motion.
“We continue to work hard with the landlords at all of our buildings to find solutions that enable us to sustainably continue operations well into the future,” a WeWork spokesperson told Bisnow in an email.
The company hasn't made a decision as to the future of its footprint at the property, per the spokesperson.
In a concurrent motion, CoStar asked the court to speed up the process and add its case to the scheduled omnibus hearing on March 27.
If the time frame is not followed, the filing said, WeWork will “continue to reap the rewards for their violations,” and its “willful continued rent-free use and occupancy” will effectively force the landlord to finance the bankruptcy cases.
CoStar’s motion argues that if the court won’t order WeWork to pay rent, the lease should be rejected and CoStar should be able to pursue legal remedies, like a lawsuit or eviction.
“Notwithstanding the Debtors’ pronouncements that withholding rent from approximately 100 of its landlords for January (and beyond) ‘worked’ for them, it does not work for Landlord and the ends do not justify the means,” the filing stated.
The filing said CoStar has tried to find a consensual resolution with WeWork but hasn't been successful, leaving the landlord with “no choice” but to file the motion.
WeWork was already asked to vacate the 28th floor by its previous landlord, which exercised a right to terminate the portion of the lease, according to the filing, which said it has yet to leave the space.
Since WeWork filed for Chapter 11 bankruptcy protection in November, the company has renegotiated over 100 leases globally, totaling $1.5B in rent savings, and rejected 93 leases, according to a WeWork spokesperson.
In the D.C. area, WeWork has renegotiated its leases at Carr Properties’ Midtown Center in downtown D.C. and 7272 Wisconsin Ave. in Bethesda, in both instances reducing its footprint. It also negotiated a reduced rent at Piedmont Office Realty Trust’s Arlington Gateway at 901 North Glebe Road.
)
)
)
)
)
)
)
)
)
)
)
)