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November 5, 2019

What is Your WeWork Exposure?

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WeWork Landlords, What is Rour Exposure?

Like many startups in the Seattle area, during the week, Prophia eats and works at a WeWork.  Given WeWork’s recent IPO challenges, we are increasingly praying at one too. Just exactly what happens if the world’s third largest lessee declares bankruptcy? The company will have to find $47 billion from somewhere in coming years to meet its contractual obligations – including about $10 billion in just the next five years.

WeWork operates in 111 cities, some of the most expensive in the world, and its S-1 reveals that the majority of its revenue comes from New York (where it is the largest office tenant in the city), San Francisco (17 locations), Los Angeles (16 locations), Seattle, Washington D.C., Boston, and London.  In Seattle alone, there is 1.5M SF spread across 16 buildings. As of 2019, these 16 locations make Seattle WeWork the biggest Northwest market by far, well ahead of Vancouver B.C. — five locations by the end of the year — and Portland with three. (See Table)

Many landlords with existing WeWork leases are scrambling to understand their risk, complicated by WeWork’s multi-point impact on complex portfolios.*

*Those with access to Prophia’s rent rolls and lease summaries can see in near-real time.

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