Office buildings in Dallas-Fort Worth are experiencing near-record vacancies, and the last thing landlords want is a large tenant going bankrupt.
New York-based WeWork, the largest shared office provider in North Texas, filed for bankruptcy protection on Monday in the face of growing financial challenges. The long-anticipated Chapter 11 filing is the latest blow to the U.S. office building owner, where WeWork occupies about 15 million square feet of space.
In Washington D-FW, WeWork has seven locations: Uptown Dallas, Victory Park, North Dallas, Las Colinas, the Clearfork development in Fort Worth, and two locations in West Plano. The total lease area is approximately 500,000 square feet.
WeWork also owns Common Desk, a Dallas-based shared office company with more than a dozen D-FW locations.
“WeWork's bankruptcy will cause headaches for landlords whose leases WeWork is denying,” said Andrew Matheny, research manager at commercial real estate firm Transwestern's Dallas office. “Based on D-FW’s acreage, there appear to be only two buildings in West Plano and Uptown that are at risk of consolidation.”
WeWork's bankruptcy could lead to even more D-FW office vacancies, which recently totaled more than 75 million square feet.
The coworking company has already closed multiple locations across the country and laid off thousands of employees. WeWork, once valued at more than $45 billion, was recently valued at just about $45 million.
WeWork reported in August that there were “significant questions” about its ability to continue operating.
In WeWork's federal bankruptcy filing, it asked for court approval to give up about 60 office leases around the world. The company also said it is negotiating improved lease terms with hundreds of landlords.
The shared office company was facing financial losses even before the pandemic caused demand for business space to plummet.
If WeWork relinquishes some of its North Texas locations, other coworking companies will likely take over some of its operations.
D-FW is one of the nation's leading coworking markets, with approximately 260 shared offices. Coworking locations in North Texas have more than doubled since 2019.
D-FW's largest shared office operators include Common Desk, Lucid Private Offices, Industrious, and Spaces.