WeWork terminated its 69,000-square-foot lease in a Baltimore development, the latest deal the coworking giant has backed out of as it tries to cut costs during the coronavirus pandemic.
The company “mutually agreed” with Armada Hoffler Properties to cancel its deal for the top two floors of the 325,000-square-foot Harbor Point in Baltimore’s Wills Wharf neighborhood, according to the landlord.
“We are pleased to have reached a mutually beneficial outcome with WeWork regarding the top two office floors of Wills Wharf,” Louis Haddad, the president and CEO of Armada Hoffler, said in a statement. “We are in active negotiations to lease the balance of the building, inclusive of the 69,000 square feet that WeWork was to occupy.”
WeWork first signed a lease for space in the $1 billion waterfront development at 1201 Wills Street in 2018, The Daily Record reported. It was to be WeWork’s first location in Baltimore and was set to open this year.
However, the coworking company has been renegotiating deals and backing out of others as it tries to survive its disastrous 2019 and the coronavirus pandemic.
“As we refocus on our core business and work with our landlord partners around the world to optimize our real estate portfolio, WeWork has decided to terminate its planned lease at Wills Wharf,” Dave McLaughlin, WeWork’s general manager for the Atlantic region, said in a statement. “We are grateful to Armada Hoffler Properties for their ongoing partnership throughout this process to find a solution that worked for everyone involved.”
In April, WeWork hired JLL and Newmark Knight Frank to renegotiate its leases around the world while attempting to turn some into profit-sharing agreements. CEO Sandeep Mathrani later told analysts WeWork was looking to exit or restructure 20 percent of its deals, the Financial Times reported.
Last month, WeWork got the small Spelthorne Borough Council to agree to waive 18 months of rent at the council’s 12 Hammersmith Grove property in London, a £4.5 million, about $5.5 million, loss for the council, The Bureau of Investigative Journalism reported.
In Manhattan, WeWork ditched the 115,000 square foot space at Columbia Property Trust’s 149 Madison Avenue it agreed to lease in 2018. It also plans to close its first-ever location at 154 Grand Street, The Real Deal reported.
WeWork giving back space could spell trouble for Manhattan landlords as it’s the largest office tenant in the borough, with 8.5 million square feet leased in Manhattan and about $486.3 million in annual rent committed to owners, a report by Savills found.
And aside from ditching space, last year WeWork started to sell off companies it purchased while it tried to move past the shared-office business it started with.
Since November 2019, WeWork sold Conductor, Teem, its investment in The Wing, Managed by Q and Meetup. Last week, it sold coding academy Flatiron School to Carrick Capital Partners for an undisclosed price, TechCrunch reported.