Southern California is facing repercussions from the financial distress of WeWork. The co-working giant, headquartered in New York, has withdrawn from agreements for space in six buildings – five situated in Los Angeles County and one in Orange County. This move is a result of WeWork’s recent Chapter 11 bankruptcy proceedings, as indicated in judicial documents.
The company has communicated its intention to the courts to abandon certain leases, predominantly for locations that are no longer in operation. Prior notification was given to all members impacted by these changes, as per WeWork’s statement to The New York Times.
Despite these cancellations, WeWork maintains a presence in the region, offering 19 spaces to its clientele in both Los Angeles and Orange Counties, as per the information on its website and reservation application.
The specific sites WeWork is withdrawing from include the Pacific Design Center in West Hollywood, where it occupied approximately 120,000 square feet across two structures within the vividly colored complex. Their tenure there was meant to extend to 2033. The Design Center is under the ownership of Charles Cohen’s Cohen Realty Brothers, who procured the site in 1999 for $165 million and later expanded it with the addition of the Red Building.
Cohen has recently secured refinancing for the property with a substantial financial package from Goldman Sachs, a portion of which has been incorporated into several commercial mortgage-backed securities deals.
WeWork’s departure, particularly from the Pacific Design Center where it was the second principal lessee after Cedars Sinai, is poised to significantly impact the property’s financial health.
Other affected locations include an almost 12,000-square-foot property on Sunset Boulevard, previously dedicated to WeWork’s “headquarters by WeWork” program, and a site on 3rd Street Promenade in Santa Monica, which is still listed for daily bookings on WeWork’s platform.
In Santa Monica, WeWork’s space at an 82,000-square-foot building is no longer listed as an available location, while in Los Angeles, a property on South Robertson Boulevard, previously tailored for WeWork, is now up for lease.
Finally, in Irvine, the Lakeshore Towers location, comprising around 75,000 square feet, has also been relinquished, with the property owner, State Street, facing delinquency on substantial loans associated with the building shortly after WeWork’s exit. The loans, initially managed by Starwood Property Trust, have now fallen into default and are part of commercial mortgage-backed securities deals, implicating financial risks for the investors involved.
Another dirty deal maneuvered by the one and only Lindsey Horvath. WeWork’s founders were described as megalomaniacs operating as cult leaders.. are you starting to see the parallels yet?
NO❗
Are you sure they are closing BOTH locations at the PDC? 8687 Melrose is the only address listed in their filing. That’s the address for The Green Building where they rented out a single floor. The Red Building is 750 N San Vicente where they currently rent 3 floors in one wing. The two were always listed as separate properties on WeWork’s site and dedicated office space in The Red Building is still listed there. Bankruptcy protection should allow them to get out of a subset of individual leases with the same landlord. I actually leased a dedicated office there… Read more »
Bad news for the investors in those mortgage backed securities, be they individuals or pension plans. I wonder how they were rated?
On a recent trip to Japan, I saw several large Starbucks had special areas where people paid around $20 for a few hours use of an area, that had hotel type business center services. It was nice, you could enjoy a beverage and light meals, and network, have meeting space, etc. It was affordable and very popular. WeWork was run by a bit of a nutcase, so it failed. The recent Netflix series, I think called “WeCrashed” was pretty good.
It’s nice to see when traveling outside of West Hollywood you are less bitter…
Basically rent a chair at a big table alongside strangers and share a copy machine. It never made any sense.
I fully expect renegotiated leases on many of these locations. That is why you file chapter 11. If you have not watched “Wecrashed” on Apple TV, you should. It really highlights how unchecked entrepreneurs can ruin their own great idea.
Yes I remember WeWork, I even have pictures ❗ I had this employer who got me a “hot desk” to do my work there after these really strange coworkers were all threatening to quit because they couldn’t stand me. Then at WeWork there were these weird people who kept complaining about me, so then they moved me to this glass isolation booth.
Are you likeable?
Oh probably NOT, which makes me irresistible to a great many people ❗