We can assure you that one year ago we never thought we’d be writing these words, but: WeWork just can’t seem to catch a break.
Yes, we fully acknowledge they used up every ounce of good luck, karma, or whatever you call it in the known universe getting that redonkulous $47 billion valuation, but, honestly, that feels like 47 billion years ago.
This week another bomb exploded for the troubled coworking giant when attorney Jim Walden of Walden Macht & Haran sent a letter on behalf of tenants demanding WeWork back off their collection of fees.
Commercial Observer could see it coming. The day before Walden sent his letter, we spoke to WeWork members and their posture on their workspace provider was … less than enthralled. “They’re acting like a company that doesn’t have a long-term plan and it’s just kind of a cash grab,” said Ray Miller, who works out of an L.A. WeWork.
A little later in our conversation, Miller was even more blunt: “They just turned into fucking Vinnie from the Mafia.” OK, then!
Bankruptcies and Unemployment
Not to ruin your Sunday, but an additional 3.2 million people were added to the unemployment rolls last week. Which brings the total number of jobs lost since the crisis began to 34 million. That’s definitely worse than what’s happening at WeWork.
And the hits kept coming: Neiman Marcus filed for bankruptcy (as previous reports would have led one to suspect). J. Crew filed for bankruptcy. Nordstrom shuttered 16 locations and Lord & Taylor liquidated all its merchandise. Restoration Hardware skipped the rent on its Meatpacking District hotel.
Deals that looked good a few months ago have gone south. For instance, we learned that David Werner has attempted to walk away from a $346 million deal to buy some 74 multifamily and retail properties from Yoel Goldman’s All Year Management.
But at least real estate people can take some comfort in knowing that there are still plenty of FIRE tenants out there who are well-capitalized and who will need space … right?!
Take a deep breath. In the middle of last month, Morgan Stanley’s James Gorman set pacemakers into overdrive when he told Bloomberg Television: “Clearly, we’ve figured out how to operate with much less real estate. Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely.” (You’re not helping, James!)
Indeed, it was worth asking the question: What happens if banks bail?
Deals
Can we get some good news up in this joint? Yes, actually, there was some.
Oxford Properties nailed a $973 million construction loan for their massive St. John’s Terminal this week. As Michael Turner told CO on our Power Briefing webinar this week, it’s probably the last loan of its size for years to come.
And, yes, there are still other very, very big deals out there. The National Pension Service of Korea and Hines bought a 49.5 percent stake in SL Green’s One Madison Avenue development for $492.2 million. Plus, SL Green sold its retail condo at 609 Fifth Avenue for $168 million to an affiliate of Reuben Brothers.
And there’s a big country out there, too, where the deals are happening. L.A.’s 2.5 million-square-foot twin office complex, City National Plaza, nabbed a $550 million CMBS refinance. Juul announced it was moving from San Francisco to Washington, D.C. And Barker Steel took a 134,000-square-foot lease in D.C.
Speaking of D.C., the capital is also looking seriously at what will be involved in reopening restaurants, a topic CO examined this week. Let’s raise our glasses and toast that someday soon this will all feel like just a terrible, terrible dream.
Enjoy the rest of your Sunday!
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May 10, 2020 at 07:30PM
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Sunday Summary: WeWork Had a Bad Week. Again. - Commercial Observer
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