WeWork in talks over rent relief as lockdowns bite flexible offices
Co-working company WeWork has stopped paying rent at some fringe sites and is asking landlords for rent reductions, as elongated lockdowns in Sydney and Melbourne bite, industry sources have said.
The company has sought relief from its landlords in a sign that the co-working industry is coming under pressure both from the length of the lockdowns and falling cash flows as customers turn away from their model.
WeWork has been forced to offer discounts to retain members as stay at home orders were imposed in Sydney and Melbourne, prompting member cancellations.
WeWork is understood to be seeking relief from its landlords including listed players as well as private building owners.
WeWork has 21 offices in Sydney, Melbourne, Brisbane and Perth but refused to discuss where it has stopped payments to landlords and the nature of discounts it has sought.
A WeWork spokesperson said the company was “committed to the long-term prospects of our locations and our relationships with our landlords. As we continue to optimise our real estate portfolio, we are in discussions with some of our Australian landlord partners to work in good faith towards finding asset-specific solutions.”
WeWork last month rolled out a program offering to cut fees by half to draw in prospective start up tenants.
The WeWork “Growth Campus” was pitched at nine of the company’s Australian locations but it did not specify if these overlapped with areas where rent payments had stopped.
“They would not be alone,” one industry executive told The Australian.
There is a wide range of flexible workspace and coworking providers and industry consolidation is expected in coming years.
Operators include Hub Australia, The Thrive Network, Workspace 365, Eastern Innovation, WorkLife, Work Tank, The Executive Centre, IWG, Creative Cubes, The Commons, Liberty Workspaces, Your Desk, Impactiv8, The Hive and WOTSO.
Some are expanding but others have been hit by the crisis.
WeWork has offices in Sydney ranging from 1 Sussex Street, 161 Castlereagh Street, 5 Martin Place, 64 York Street, 50 Carrington Street, 320 Pitt Street, as well as 333 and 383 George Street. In Melbourne it has offices at 401 Collins Street and 222 Exhibition Street.
WeWork crashed to a $102.5m loss for 2020 as it took impairments worth $42.2m on its portfolio of hubs. WeWork’s local outfit took a $110m equity injection from its parent last year.