WeWork’s Woes Leave Manhattan Landlords Weighing an Uh-Oh Moment
WeWork’s delayed initial public offering has endangered billions in new loans.
(Bloomberg) -- For years, landlords and real estate brokers worried that WeWork’s rapid rise would cut into their business. Now the office-leasing industry must grapple with the potential loss of a voracious customer.
Take Manhattan, where WeWork occupied more than 7 million square feet as of the end of June, about 73% more than it had a year before, CBRE Group Inc. data show. WeWork accounted for 6.8% of Manhattan leasing activity in 2018, and 5.2% so far this year, according to CBRE.
WeWork’s delayed initial public offering has endangered billions in new loans, raising the prospect that the company will have less money to commit to new leases. Any retreat would be especially bad for owners of older office buildings, who face competition from state-of-the-art towers like One Vanderbilt and the crop of new spaces at Hudson Yards.
Those new buildings “are giant vacuum cleaners that are merely going to suck tenants out of existing buildings,” said Daniel Alpert, managing partner at Westwood Capital LLC. “Net new demand is a rare bird.”
A representative for WeWork declined to comment.
Less demand from the co-working giant would probably lead to a modest increase in vacancies across the New York office market, said Bloomberg Intelligence analyst Jeffrey Langbaum, though the effect would be mitigated if would-be WeWork tenants turn to traditional offices or other flexible-office providers.
To contact the reporter on this story: Patrick Clark in New York at pclark55@bloomberg.net
To contact the editors responsible for this story: Rob Urban at robprag@bloomberg.net, Christine Maurus
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