Following the widespread shift to remote work caused by the pandemic, many employees chose not to to physical offices, resulting in a surplus of vacant office space in New York City. Adding to this crisis, WeWork, the company that popularized the concept of co-working spaces, is now closing numerous offices, potentially worsening the commercial real estate situation in the city.
Eyewitness News reporter Lord Glassberg highlights the issue by showcasing three WeWork locations within a short distance. Today, WeWork is struggling due to overborrowing, excessive rental agreements, and diminished foot traffic.
Despite successfully glamorizing office spaces, WeWork ultimately operates as a subletting business, leasing a significant amount of space. The company has faced numerous challenges, including the impact of the pandemic, which not only made remote work practical but also socially acceptable.
The remote work trend persists, resulting in half of New York City’s offices remaining empty. WeWork’s plan to close 35 locations in the city will further contribute to the surplus of office space and leave landlords struggling to collect rent. Alan Elstein, a real estate expert, warns that the commercial real estate market may face a crisis.
However, Katherine Wild, who oversees the Partnership for New York City, remains optimistic, citing the city’s resilient economy. She believes that the losses caused by WeWork can be offset by a thriving business environment.
Landlords may become more flexible, potentially reducing rents and making it more affordable for small businesses to directly lease office spaces instead of relying on intermediaries like WeWork..