WeWork, the flexible space provider in the midst of renegotiating its global leases as it battles to stay afloat, has begun work on the fit-out of a major new office at a Hines development in Dublin.
The move is an insight into the space the under-pressure group will endeavour to retain as it slashes its lease commitments across the globe.
At the beginning of this month, WeWork's chief executive David Tolley held a call with landlords before he published a letter confirming the company has begun the "next phase" of scaling back its huge amounts of space, which it typically leases on a long-term basis before packaging it for occupiers on shorter terms.
The company says it will be exiting "unfit and underperforming locations" and reinvesting in its strongest assets. It had said in its second quarter results in August that "substantial doubt exists" about its ability to continue as a going concern, putting landlords and tenants at millions of square feet of space on notice.
WeWork is one of the biggest individual tenants in Dublin, operating from three locations, and there had been speculation it would ditch its proposed opening of WeWork One Central Plaza given it has not filled the space. It has now confirmed it has started work on fitting out the 73,000-square-foot space and will open in May 2024.
In a statement it said: "WeWork One Central Plaza underscores the company’s commitment to investing in its product offering and member experience. It also reaffirms the demand that WeWork continues to see in Dublin, with occupancy at over 90%, from businesses of all sizes who are prioritizing flexible, service-led and well-designed workspace that meets both business and employee needs."
Formerly the landmark Central Bank building, WeWork One Central Plaza is planned for eight floors and will include space for WeWork's All Access and On Demand members. There will be private bookable offices, office suites and full floors to lounge space, pantry areas and an outdoor terrace with panoramic views overlooking the capital.
Peter Greenspan, global head of real estate, WeWork, said in a statement the building "underscored its commitment to invest in our member experience, product and services across key markets".
Peter Lynn, managing director with US development giant Hines did not mention WeWork, but added: "The project will reach another major milestone shortly with the occupation of the offices in One Central Plaza and we look forward to several exciting new leasing announcements soon which will bring occupancy close to 100% and the project into its fully operational phase with an expected 1,000 additional workers adding new vibrancy to the plaza area and local business district.”
Alongside Central Plaza, WeWork also occupies the 100,000-square-foot Dublin Landings 2 building in the Docklands as well as locations at Harcourt Road and the Charlemont Exchange near the Grand Canal.
Dublin, like London and New York and other leading global office markets, has significant exposure to WeWork should the company go bankrupt.
WeWork has hired real estate adviser Hilco Global, consultant Alvarez & Marsal and law firm Kirkland & Ellis regarding its restructuring options.
CoStar News revealed this week that RXR Realty, a prominent New York landlord that houses offices leased by WeWork at two high-profile Manhattan properties, is in talks with the provider of flexible office spaces over a backup plan should its turnaround plans falter.
Developer RXR Realty, a provider of space to WeWork at 75 Rockefeller Plaza and 620 Avenue of the Americas, could offer to take on WeWork’s enterprise customers and sign direct leases with them should WeWork cease operations, RXR CEO Scott Rechler said in an interview. Those customers are companies with at least 500 employees, including e-commerce giant Amazon, which CoStar reported has taken 90,000 square feet at Rockefeller Center.
In another development, WeWork's global flexible space rival IWG has been snapping up space it is vacating.
The talks are an example of how landlords and rival operators are responding as WeWork looks to renegotiate or cancel its leases to achieve profitability.
WeWork's immediate problem is it is fast running out of cash. In its second quarter results it said cash and cash equivalents declined to $205 million from $625 million in the year-earlier second quarter.
It has already exited or amended 590 leases since the fourth quarter of 2019 and cut $12.7 billion in future lease payments.
WeWork was trading at a near record low of 13 cents a share in late August and New York Stock Exchange rules meant it needed to ensure its stock price moved above $1 a share for it to remain on the exchange. It concluded a 1-for-40 reverse stock split to resolve the problem and by 20 September was trading at $3.70 a share.
When WeWork finally listed in 2021 it was valued at $9 billion, down from the $47 billion valuation that the company and majority shareholder SoftBank had attached to it at its first failed attempt at listing in 2019.