WeWork, whose worth hit a peak of $47 billion in 2019, applied for Chapter 11 bankruptcy protection on Monday. Its restructuring program is focused on its U.S. and Canada outlets. Meanwhile, its London branches and other overseas sites continue to be uncertain as landlords discuss if they should terminate their contracts with WeWork. According to analysis conducted by CoStar utilizing both its own resources and those of WeWork, the company has 36 offices in London occupying around 2.89 million square feet.
WeWork, the U.S. office rental startup, has submitted an application for Chapter 11 bankruptcy, which has put office closures across the U.S. where it had become a common destination for tech firms in jeopardy.The consequences of the company's restructuring could also affect its London operations, where it is one of the biggest tenants.CoStar, the commercial real estate data provider, has recorded 36 London offices with a total size of 2.89 million square feet.On Monday, the company, which had a value of $47 billion in 2019, specified that the Chapter 11 bankruptcy filing only applies to its U.S. and Canadian locations.The future of WeWork's London and other international locations is however still uncertain.This past week, at least one property group has already moved to terminate its lease agreement with WeWork, in view of its deteriorating financial state.
CoStar's analysis revealed that M&G and Nuveen are both landlords of two of the buildings WeWork is occupying in London.The most significant landlord with connections to WeWork's financial issues is Almacantar's 290,000-square-foot Southbank West in Waterloo, according to CoStar.
When contacted by CNBC, M&G, Nuveen and Almacantar were not immediately available for comment. According to data, the City Core North market in London is the most affected, with WeWork occupying 684,000 square feet of space. When contacted for comment, WeWork was also not immediately available.
Deepak Tailor, CEO of LatestFreeStuff - an online startup which gives customers freebies - said he was unclear as to what would happen with the office building his firm currently occupies in London's Tower Bridge. He noted that he was 'locked in' a seven-month agreement with WeWork, though he was unsure as to the legal outlook. Tailor stated that he had been in the WeWork building for eight years and had found it to be accommodating, with the office offering free beer on tap. Yet, he noted that he wouldn't 'trust them as a brand anymore' following the collapse of the company.
WeWork has experienced a spectacular corporate implosion in the past years, which began with its failed attempt to go public five years ago. The Covid-19 pandemic has only added to the company's woes, as numerous businesses have cancelled their leases with them.
The recession following took its toll and caused clients to end their subscriptions to WeWork. An August filing to regulators unveiled the likelihood of bankruptcy for WeWork. The company declared its premises still remain active and operational, and they will carry on providing members the same co-working environment..
Helical, the property investment firm, recently announced it had relinquished its rental agreement with WeWork on six floors at The Bower office development in London. The firm specified this was as a result of "non-payment of rent for the September quarter," for which it has since negotiated a fee equivalent for the whole quarter's rent and service charge under the terms of their previous arrangement. WeWork has since regained occupancy of the building.Helical has stated that it is in the process of determining "next steps" with regards to the space, and will provide an update on its Nov. 22 half-year results. WeWork employs a different model compared to Helical, renting properties from commercial real estate firms and then renting them out to companies at higher prices in order to make a profit on the difference. However, many investors have raised queries about the company's viability. - CNBC's Rohan Goswami and Ari Levy contributed to this report.
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