WeWork’s Chapter 11
Between the rise of remote work, and rapid increase in interest rates, America’s office landlords were already facing an uphill battle. Now WeWork’s bankruptcy is adding to their struggles.
The coworking company was at one point the largest office tenant in New York, but this week, it filed for bankruptcy. For office landlords, this means more trouble ahead.
Closing Down Offices
WeWork’s office space spans some 600 office buildings throughout the U.S. In New York, its leases are concentrated in older Class B properties, which tend to be less desirable for new tenants, adding more pressure to the landlords who would want to find new renters after WeWork moves out.
As part of its bankruptcy, WeWork hopes to cancel at least 40 leases in the city.
The Ripple Effect
WeWork’s bankruptcy, and the potential repercussions for commercial landlords, may have a knock-on effect for the financial system, as many office loans sit on bank balance sheets. If there’s trouble ahead, lending conditions could tighten.
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