WeWork, the co-working juggernaut that when ranked as Boston’s largest workplace tenant and ushered in an period of workplace facilities wars, filed Monday evening for Chapter 11 chapter reorganization in New Jersey federal courtroom.
It’s one more exceptional fall from grace for a corporation as soon as valued at a whopping $47 billion.
It’s unclear what the longer term holds for WeWork’s footprint in Boston. Analysis from brokerage Colliers exhibits the corporate nonetheless occupied greater than 1 million sq. ft throughout throughout a dozen places as of this summer season. WeWork’s web site, in the meantime, lists simply 9 open places in Boston, with one other in Cambridge.
Three Boston places have been quietly faraway from WeWork’s web site since August, analysis from actual property firm CoStar exhibits: 100 Summer time St. and 40 Water St. in downtown and 75 Arlington Avenue within the Again Bay.
The Summer time and Water Avenue places had been listed among the many 69 “rejected” leases within the firm’s Chapter 11 chapter submitting Monday, that means that the corporate is basically asking the courtroom to terminate their leases. Rockpoint, the owner at 100 Summer time St., declined to remark.
WeWork’s “complete reorganization” comes amid a interval of post-pandemic tumult in Boston’s industrial actual property market, significantly downtown, the place many firms are downsizing as they transition to the hybrid work schedules that WeWork as soon as hoped to capitalize on.
But it surely’s that very tumult that created much more problem for WeWork, mentioned Jeff Myers, analysis director at brokerage Colliers. In its pre-COVID heyday, the operator invested closely in top-tier downtown workplace buildings, the place vacancies have elevated to twenty p.c in latest months. Sublease house, which is by its very nature short-term house provided at cheaper rental charges, has additionally grown to document ranges.
“There’s extra competitors for tenants between WeWork and sublease house, together with direct availabilities,” Myers mentioned.
However the pandemic was not WeWork’s sole demise knell. Its troubles started earlier than that, with fast growth, a failed first attempt at going public, and the 2019 ouster of eccentric co-founder Adam Neumann all contributing to investor retreat from what was an finally unsustainable enterprise mannequin.
Previous to submitting for Chapter 11 chapter, the beleaguered firm made a number of efforts to get again onto stable monetary footing. WeWork was taken over by Japanese funding big SoftBank Group Corp. in 2019, underwent a profitable IPO in 2021 by a merger with a particular goal acquisition firm, and, in September, tried to renegotiate nearly all of its leases.
But it surely wasn’t sufficient.
Based in 2010, WeWork was constructed on the idea of providing freelancers and small startups what amounted to a pay-as-you go subleases in swanky digs, full with lounge furnishings, beer on faucet, and WeWork-branded wine. As WeWork grew, it centered extra on courting company tenants, both for satellite tv for pc workplaces or extra versatile variations of their conventional house. Native corporations reminiscent of catering tech firm ezCater, insurer Liberty Mutual, and footwear model Puma have all counted themselves tenants of WeWork.
WeWork first landed in Boston in 2014. One in all its first properties within the metropolis, the 11-story constructing at 745 Atlantic Avenue close to South Station, was at one time WeWork’s largest location. However that workplace closed all of the sudden in 2021, and its landlord, Oxford Properties, sued the corporate for $1.8 million in again lease. Final 12 months, Oxford bought a green-light from the town to transform the constructing into lab house.
WeWork stays by far the biggest coworking operator within the area, and has about double the footprint of the next-largest idea: Regus plc, which holds about 521,000 sq. ft and has been within the area since 2002.
The next Boston-area places are nonetheless listed as open on WeWork’s web site: One Lincoln St., 200 Berkeley St., 711 Atlantic Ave., 501 Boylston St., 24 Farnsworth St., One Seaport Sq., One Beacon St., 33 Arch St., and 200 Portland St., together with 625 Massachusetts Ave. in Cambridge.