Snapshots
Most markets have marginal exposure to WeWork
August 16, 2023
Contributors:
- Phil Ryan
- Jacob Rowden
- WeWork’s SEC disclosure on August 8 that “substantial doubt exists about the company's ability to continue as a going concern” was not a surprise for the market and simply reinforces the path the company has been taking over the past several years to restructure its portfolio and reduce costs.
- Flexible space providers have generally remained defensive since the onset of the pandemic: despite averaging 2.7 million s.f. of quarterly gross leasing from 2016-2019, flex providers have averaged just 720,000 s.f. quarterly since 2020, and have not exceeded one million s.f. of leasing in a post-pandemic quarter.
- WeWork’s exceptionally rapid expansion in the years leading up to the pandemic left the company especially vulnerable to office market disruptions relative to other flexible office providers: at the end of 2017, Regus occupied about 10% more space than WeWork nationally, but by the end of 2019 WeWork had grown to occupy almost twice the footprint of Regus in the U.S.
- In total, WeWork occupies less than 1% of U.S. office inventory. Although there are pockets of high exposure in markets including NYC, Seattle, San Francisco and DC, the company’s performance does not pose a material or systemic threat to the overall market.