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It’s no secret that WeWork has recently faced hard times. While WeWork’s difficulties certainly have affected employees and investors, the flexible workspace’s demise could also have a significant impact on the state of New York real estate. For one, other flexible co-working models could take note of WeWork and choose to structure their property and leasing structures differently. Despite the difficulties WeWork has experienced, other companies will still likely choose to pursue the co-working space model as a viable option for business.


It is also a possibility that independent landlords could take advantage of the void WeWork has created and build their own flexible office spaces. It is hard to accurately speculate how this void could be filled in a way that benefits the market at large.


When evaluating how these events will play out in the real estate market, we first need to acknowledge that WeWork does not own a massively significant amount of real estate in New York — and the buildings they did utilize were occupied partially.


Some companies (like Rudin Management Company) are still supporting WeWork in its ventures. The company recently opened up a property by the name of Dock 72 in Brooklyn with a large WeWork space as a major tenant.


If WeWork were removed from the city’s real estate landscape completely, Manhattan would experience -700,000 square feet of negative absorbed leased space. The domino effect that this change could have on landlords and the market at large is significant.


It is worth noting that there are many, many variables that could impact the real estate market in New York. Perhaps it is more pertinent to understand why WeWork’s model is problematic in the first place.


The first is that WeWork has chosen to undertake billions of dollars worth of debt to fund its ability to have such a high volume of real estate in so many densely populated cities. In addition, WeWork’s model of leasing real estate spaces to buyers that it does not personally own creates difficulties as well — primarily that WeWork has to pay such high rent to sustain its business. Essentially, WeWork pits long-term liabilities against short-term income streams that are bound to fluctuate with time and market state.