There’s No One-Size-Fits-All Answer, Professionals Say, But Many Owners Should Listen.
WeWork is trying to renegotiate nearly all its leases in an attempt to turn the money-losing company around. Many landlords are expected to listen.
Commercial real estate professionals interviewed by CoStar News said it’s in the best interest of property owners to discuss terms with the high-profile flexible office provider, which has warned “substantial doubt exists” about its ability to continue as a going concern. But there isn’t a one-size-fits-all approach.
“It’s better to engage smartly with WeWork and see what’s available than not talking at all,” said Isaac Marcushamer, an attorney at Miami-based law firm DGIM. Meanwhile, WeWork should try to “renegotiate as many leases” as possible to get to the “economics that are acceptable.”
WeWork’s bid to restructure its lease terms comes as it has said those obligations are the “primary challenge and obstacle” to its profitability and free cash flow. The New York company’s lease liabilities totaled over two-thirds of its operating expenses and 74% of its revenue in the second quarter, a percentage that’s much higher than that of rivals such as Industrious.