WeWork Shrinking Dock 72 Space and Jettisoning 40 Locations
WeWork seems to be getting out of slow-performing locations while the getting is good.
The coworking giant announced Thursday that it would exit 40 underperforming locations in the U.S. and shrink its headquarters at Dock 72 in the Brooklyn Navy Yards as its revenue jumped 24 percent year-over-year in the third quarter of 2022. The company made the announcements during its third-quarter investors call.
WeWork will downsize by two unbuilt half floors in the Rudin Management and Boston Properties (BXP)-owned Dock 72, which it designated as one of its flagship headquarters in 2020, but will continue to occupy four floors in the building, according to a company spokesperson.
WeWork declined to say how much of its 220,000 square feet in Dock 72 it would ditch, but floor plates in the building range from 65,360 square feet near the base to 49,300 square feet closer to the top.
Sandeep Mathrani, CEO of WeWork, regarded the scaling back as a “disciplined and strategic approach” to correcting the company’s ailing performance over the last few years. The moves come as WeWork reported quarterly revenue of about $817 million while it shrunk its losses to $568 million, an improvement from the $802 million it lost during the same time last year.
“The long-term value of flexibility is clear, and we remain focused on strengthening our business while navigating a volatile macroeconomic environment,” Mathrani said in a statement. “As evidenced by our growth in revenue, reduced costs, optimized portfolio and reinforced balance sheet, we are leveraging all the tools at our disposal to continue executing against our goals.”
The 40 locations expected to close in November will all be in the U.S., but a further breakdown was not provided, and WeWork is planning to open 20 other locations.
Nevertheless, WeWork abandoned its plans to open a 146,000-square-foot space spanning 10 floors at 830 Brickell in Miami, which it preleased back in 2019 before the developers Oko Group and Cain International had even unveiled specifics for the yet-to-be developed office tower that has become a Miami trophy asset.
The decision to ditch space in the $390 million Dock 72 is a blow for the gleaming development, which opened in 2019 with WeWork as its sole occupant but has struggled to attract tenants.
Things have started to turn around slightly for Dock 72, as online cooking and home website Food52 took 42,000 square feet in the property in 2021 and marketing firm Huge locked down 80,000 square feet earlier this year.
For WeWork, which nearly went bankrupt after a disastrous initial public offering attempt, reported in-person occupancy at its locations was around 71 percent, and it added 8,000 members with 7,000 workstations in the third quarter.
As of Sept. 30, WeWork operated a total of 801 locations in 39 countries, which provided it with about $1.5 billion in liquidity.
Mark Hallum can be reached at firstname.lastname@example.org.