With short-term commercial real estate hit hard by the coronavirus pandemic, IWG’s (OTCPK:IWGFF) Regus flex-office arm has put roughly 90 locations in the U.S. into Chapter 11 protection over the past six weeks, reports TheRealDeal, citing court filings.
Six of those shared workspaces are in New York City. And real estate investor Jonathan Litt points out that “co-working was the primary (and at times only) driver of positive absorption for Manhattan office landlords in recent years.”
Most of the sites affected by the bankruptcy are in urban cores, such as New York, Chicago, and San Francisco. The company believes, though, that its suburban offices, rather than those in dense cities, will be more attractive to clients.
Still the number of sites entering bankruptcy protection are only about 2% of the locations the company has in the U.S. and Canada.
Overall, the company plans to speed up its plan to trim 4% of its global portfolio
All told, almost $13B of commercial-mortgage backed securities have exposure to Regus locations, according to a recent Kroll Bonds Ratings Agency report.
Regus, the largest flex-office provider in the world, was founded in 1989 and is seen as a barometer for the short-term office market, which grew significantly in the past few years with WeWork’s (WE) expansion.
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