Last month, WeWork declared that it might not be in business for long. However, on Wednesday, the CEO of WeWork stated that the company will try to renegotiate almost all of its leases so that it can pull out from all the underperforming locations.
The CEO, David Tolley, gave all the details about the action in a letter, which consisted of all the intentions of how to reduce WeWork’s spending on office space leases. Tolley took over as the CEO of the co-working company after Sandeep Mathrani gave a sudden resignation from the office in May.
According to the statements of David Tolley,
“We will seek to negotiate terms with our landlords that allow WeWork to maintain our unmatched quality of service and global network, in a financially sustainable manner […] As part of these negotiations, we expect to exit unfit and underperforming locations and to reinvest in our strongest assets as we continuously improve our product.”
Since the later months of 2017, WeWork has made a total loss of $15 billion. Hence, the company carried out a continuous process of negotiating lower rents for more than three years.
In some cases, they also had success when landlords were in desperate need to fill office towers. This is because the spaces were emptied when the “work from home” culture started during the time when the pandemic was at its highest.
However, in most cases, landlords do not reduce the costs of leases. This is one of the major reasons why WeWork said that it can walk away from certain underperforming office spaces.
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