WeWork's discarded leases and outposts around the world have caught the attention of fellow coworking operators hoping to capitalize on their New York-based rival's turmoil to fuel growth for themselves.
Global flexible workspace giant IWG has snapped up another WeWork space as the company, one of the largest coworking operators in the world, looks to fold in the vacated spaces as part of its aggressive expansion plan.
The company earlier this month signed a long-term deal for more than 40,800 square feet in the First Citizens Bank Plaza tower in Charlotte, North Carolina, according to CBRE and CoStar data. The agreement with landlord Dornin Investment Group means IWG will take over two of the building's 23 floors after WeWork vacated the space last year.
IWG is expecting to move into the tower at 128 S. Tryon St. sometime this summer, boosting the property's occupancy to about 60%. The First Citizens outpost will be the publicly traded operator's third opening in the greater Charlotte area within a year.
The deal is the latest extension to an ambitious growth streak for IWG, which in the first half of 2023 added about 400 locations to its global portfolio and posted its highest half-year revenue in the company's more than 30-year history.
IWG, the parent company of coworking brands such as Regus, Spaces, HQ and Signature, said it is in the process of adding about 1,000 locations around the world throughout the year. The Switzerland-based company now has 4,000 locations across 120 countries.
That growth streak is in direct opposition to WeWork, which last fall filed for bankruptcy and began scrambling to renegotiate leases in an effort to slash expenses and reposition the company for profitable growth. The company's lease liabilities totaled more than two-thirds of its operating expenses and 74% of its revenue in the second quarter of last year, prompting it to try to reject 65 lease agreements across the United States and Canada as part of its Chapter 11 bankruptcy filing.
While WeWork said in a recent court filing that its “lease portfolio has been, and continues to be, a significant contributing factor to [the company’s] current financial challenges,” IWG and other coworking operators see it as an opportunity to correct some of WeWork's earlier mistakes and scoop up prime real estate around the world.
“We have taken over quite a few defunct WeWorks and maybe there will be more of those to come,” IWG CEO Mark Dixon told CoStar News following WeWork's bankruptcy news. “There’s loads of opportunities, and we’re absolutely focused on it."
The company has already taken over more than 50 former WeWork spaces around the world, Dixon told analysts on the company's latest earnings call, adding that its focus on flexible lease terms and management agreements were key to the flexible office provider's sustainable growth.
By comparison, WeWork bolstered its expansion over the past decade with long-term leases set at high rents, one of the primary contributors to the operator's mounting financial woes.