WeWork has crapped out, with a bankruptcy this week that will lead to the likely termination of seven office building leases and about half of its inventory of space in the Bay Area.
The New York-based co-working firm filed for Chapter 11 bankruptcy and works to end 69 office leases in Canada and the U.S., including 14 in California, the San Jose Mercury News and San Francisco Business Times reported.
At its peak in 2019, the firm then led by Adam Neumann ran 36 co-sharing sites across the Bay Area, with more than 3.3 million square feet of hip offices open to tech firms, startups and anyone with a laptop.
Now WeWork has a Bay Area portfolio estimated at 1 million square feet, and wants to terminate the leases at six offices in San Francisco and one in Oakland, with a combined 440,000 square feet of space.
“WeWork is requesting the ability to reject the leases of certain locations, which are largely nonoperational, and all affected members have received advanced notice,” the company said in a statement.
Bay Area landlords, hit hard by a pandemic shift to remote work, appear to have braced themselves for the WeWork collapse.
“WeWork has been over its skis for some time,” Dave Sandlin, an executive with San Jose-based Colliers, told the Mercury News. “Property owners have been getting ready for these problems.”
The WeWork exits will affect six commercial properties with 403,000-square feet of offices in San Francisco, where its offices have already closed, according to the Business Times. The company has been sued by many of their owners for not paying rent.
Yet San Francisco remains “a key market for WeWork,” a company spokesperson told the Business Times
The exits include a tower at 430 California Street, where WeWork has leased 250,000 square feet since 2018. In August, the firm said it would surrender its lease and vacate the property.
WeWork also wants to scrap its lease at 25 Taylor Street, where it takes up 42,600 square feet, but stopped paying rent during the pandemic.
The firm also wants to end leases for 66,000 square feet at 1455 Market Street; 17,700 square feet at 222 Kearny Street; 9,700 square feet at 180 Geary Street; and 17,500 square feet at 800 Market Street.
In the East Bay, WeWork seeks to exit 37,000 square feet at 1814 Franklin Street, which it’s leased since 2017. Oakland-based Harvest Properties, which owns the building, sued WeWork in April and accused the company of failing to make its $285,244 rent for the month.
Kennedy Wilson and Takenaka had sued WeWork for more than $250 million in past due and future rent at 430 California Street, the Business Times reported in October. The investor affiliate was named in bankruptcy proceedings as WeWork’s fifth largest unsecured creditor.
— Dana Bartholomew