WeWork, the flexible office space provider that said it’s rejecting about 70 leases since filing for bankruptcy protection last month, is giving a hint of the kind of locations it aims to keep.
In the first lease assumption announcement since its Chapter 11 filing, the New York-based coworking company said it’s keeping its unexpired lease at 1440 Broadway by West 40th Street and just south of Times Square in its hometown after it reached a deal to shorten the lease term and cut the rent, according to a bankruptcy court filing Tuesday.
WeWork’s space at the building — one of its largest — spans 300,000 square feet across 10 floors, a company spokesperson told CoStar News. Even though it’s the only space WeWork’s assuming at this time, the spokesperson said there’ll be more coming as the company has to assume any lease it intends to operate post-bankruptcy. WeWork gained a high profile with rapid growth in the decade after its 2010 founding, with some leases that proved too costly, so its scaleback has been closely followed in the commercial real estate industry.
“This agreement generates long-term, sustainable value of an iconic New York City building,” the WeWork spokesperson said in an emailed statement, declining to specify the updated lease terms.
WeWork has said its lease obligations remain the biggest obstacle to its turnaround bid. The company also has said it’s renegotiating all its leases with landlords around the world.
Amazon is the biggest occupier of WeWork’s space at the building after the e-commerce giant told CoStar News in August it has renewed nearly 210,000 square feet at the location. The Seattle company, already a WeWork enterprise member, over the summer also took 90,000 square feet with WeWork inside RXR Realty-owned 75 Rockefeller Plaza. WeWork’s enterprise members refer to companies with at least 500 employees.
The WeWork spokesperson declined to specify its members at the building. An Amazon spokesperson didn’t immediately respond to a CoStar News request seeking comment.
Los Angeles-based CIM Group owns the 25-story, 745,000-square-foot building, according to CIM’s website. Spokespeople for CIM didn’t immediately respond to a CoStar News request seeking comment.
The property is tied to a $399 million commercial mortgage-backed security loan with a variable interest rate currently at 9.65%, according to CoStar data. The loan has been sent to a special servicer, with CIM planning to deed the property back to the lender, CoStar data shows.
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