As WeWork Files for Bankruptcy, Other Coworking Businesses Are Doubling Down
British holding company IWG is poised to snap up offices left empty by the startup. Smaller enterprises are expanding, too.
British holding company IWG is poised to snap up offices left empty by the startup. Smaller enterprises are expanding, too.
Coworking goliath WeWork filed for bankruptcy on Monday this week, capping a yearslong saga for the startup once valued at $47 billion. Recently, it made a deal with lenders to make good on debts, but this summer, its value dropped sharply, leading the company to skip payments on the almost $95 million it owed in interest.
According to the New York Times, the filing will deliver the biggest blow to New York City, where WeWork holds its largest global presence. Currently, one-fifth of all class B and C office buildings in the city are vacant, and, according to the Times’s source at Avison Young, a commercial real estate advisory firm, nearly two-thirds of the coworking company’s leases are for spaces in these buildings.
WeWork’s demise, however, looks as if it’s far from the end of shared office spaces. In August this year, IWG, the Switzerland-based British holding company with a portfolio of coworking businesses that includes Regus and Spaces, saw a 48 percent surge in its half-year profit, according to Reuters. Reports from Bloomberg and CoStar note that IWG is already eyeing soon-to-be vacant WeWork spaces. It currently has a heavy presence in London, and according to CoStar, several of those properties were formerly leased by WeWork.
WeWork purchased the historic Lord and Taylor department store building on Fifth Avenue in New York in 2019, the same year the company’s $47 billion valuation made it the one of the most valuable in the U.S. at the time.
Photo by David Dee Delgado/Getty Images
IWG’s moves reflect a confidence in coworking as post-pandemic workplace trends favor flexible arrangements, even though data surrounding demand is mixed. CoworkingCafe, a website for booking shared office space, reported that of the country’s top markets (Manhattan and Los Angeles, notably) registration decreased between the second and third quarter; however, Sunbelt markets such as Phoenix, Houston, and Dallas saw growth in coworking desks.
Independent brands are also taking steps forward. Industrious, which originated in Chicago and holds more than 160 locations worldwide, has grown its share of the coworking real estate market, even establishing a new 40,000-square-foot space in Washington, D.C., that includes residences. On the West Coast, Premier Workspaces has primarily served the Southern California market since 2002, but has expanded to Seattle, Dallas, and Phoenix.
Top image by Costfoto/Future Publishing via Getty Images
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