WeWork Works Out Deal at DC’s Midtown Center Amid Bankruptcy
By Keith Loria February 20, 2024 5:36 pm
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WeWork has extended a key Downtown Washington, D.C., lease as it works its way through bankruptcy, the company announced Tuesday.
The coworking giant negotiated a deal with landlord Carr Properties to remain at Midtown Center, working out a reduction in rent for less space at the two-building complex. The deal follows WeWork’s recent request from the court overseeing its bankruptcy proceedings for additional time to negotiate with landlords to remain in some of its current spaces while it tries to find fresh financing.
In 2019, WeWork signed a lease for 110,000 square feet at the 868,000-square-foot at 1100 15th Street NW. It was not immediately clear how much space the coworking company will retain going forward.
The two-tower Midtown Center, which was completed in 2018, is facing its own share of trouble. Majority tenant Fannie Mae plans to vacate its 713,000-square-foot headquarters at the property in 2029, five years earlier than expected, Commercial Observer reported in January, resulting in some long-term risk for the lender.
WeWork, which filed for Chapter 11 bankruptcy in November, has 11 other spaces in the D.C. region. The company also filed a motion to retain its space at The Wilson, a 348,000-square-foot property at 7272 Wisconsin Avenue in Bethesda, Md., also owned by Carr Properties. It’s unclear what’s happening with the other 10 locations.
The coworking company also announced deals to remain at two other properties across the U.S.: a 55,400-square-foot space at 830 NE Holladay Street in the Lloyd District of Portland, Ore.; and approximately 40,000 square feet at the 29-story 831 S. Peachtree in Norcross, Ga., which was developed by a joint venture between the Hanover Company and The Loudermilk Companies. No details were disclosed if WeWork would also be giving up space in exchange for rent reductions at these properties.
“This new agreement cements our long-term partnership with Carr Properties and our commitment to the capital, positioning WeWork to deliver solutions that power D.C.’s entrepreneurial and business community for the future,” Kate Harper, vice president of global real estate at WeWork, said in a statement.
WeWork also announced a plan for revenue sharing and management agreements with more than two dozen landlords around the U.S., though exact locations weren’t shared. It has also renegotiated leases for several locations around the country that include reduced rent and shorter lengths.
As part of its bankruptcy proceeding, WeWork has been dropping dozens of locations around the country and has drawn the ire of some landlords.
A group of WeWork landlords accused the coworking company of skipping out on $33 million in rent that came due Jan. 1, while WeWork accused others of demanding above-market rent and keeping WeWork on the hook for penalties and back rent.
WeWork could not disclose further information outside of its filing.
Keith Loria can be reached at Kloria@commercialobserver.com.
