Flight to Quality Could Intensify Under WeWork Deal

Court approval of WeWork’s proposed bankruptcy exit, which could come as early as the end of May, is likely to set off more office disruption. Using tools available through the bankruptcy process, WeWork supposedly had already rejected 16% of its future long-term lease costs and ultimately the company could reduce their future rent obligations by 40%.

That could mean previously amended leases, new management agreements, or rejection of additional leases. But whether dropping obligations or cutting previously accepted prices, there will be some impact on the office market in the locations that WeWork has operated. The lower local market average rents or the more space available, the less that many property owners may be able to command from tenants.