Leases  ·  Office

WeWork to Spare Dumbo Location from Closing

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WeWork will stay open for business at 77 Sands Street in Dumbo, Brooklyn, but in a smaller footprint, the coworking company announced Monday.

Landlords RFR and Kushner Companies agreed to modify WeWork’s lease to allow it to remain at the property at a discounted rent rate, according to a motion WeWork filed in U.S. bankruptcy court Monday. 

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WeWork signed on for 72,000 square feet in the 225,684-square-foot office building in 2015. It’s unclear how much space WeWork will occupy after the new deal. It previously signed two separate leases across at least five floors — where LoopNet reports floor plates of 14,800 square feet — and will drop down to just three floors of the 12-story office building, according to court records and WeWork.

A spokesperson for  RFR declined to comment. 

A spokesperson for Kushner did not respond to a request for more details on the deal, but CEO Laurent Morali  said in a statement that WeWork’s “presence and flexible workspaces have been critical to attracting other innovative tenants and retailers, creating a vibrant community near downtown Brooklyn.” 

(Disclosure: Joseph Meyer, the chairman of Commercial Observer owner Observer Media, is the husband of Nicole Kushner Meyer, a principal at Kushner Companies.)

Shortly after it landed in bankruptcy court in New Jersey last fall, the coworking giant owed more than $3.1 million in unpaid rent at the 12-story Dumbo office building and WeWork’s 10th-floor space in the property was one of the first leases it tried to reject, according to court records and a spokesperson for WeWork, who declined to comment further.

As part of the new deal, WeWork will have to pony up about $930,000 to cure its rent default in the property, court records show.

While WeWork’s meteoric rise and fall played out in bankruptcy court, the landlords of the former industrial office building have faced their own ordeal, seeking to refinance $435 million in debt tied to the property last year, as Commercial Observer previously reported.

It’s unclear if brokers were involved in the negotiations to modify WeWork’s lease at 77 Sands.

Abigail Nehring can be reached at anehring@commercialobserver.com.