In a high-stakes showdown between co-working giant WeWork and powerhouse landlord DivcoWest, the battle for millions unfolds on the streets of Manhattan. As WeWork teeters on the brink of bankruptcy, DivcoWest has filed a lawsuit demanding a whopping $30 million, according to The Real Deal. This legal dispute could leave the co-working juggernaut reeling. The Post has reached out to representatives for DivcoWest and WeWork for comment.
DivcoWest, the San Francisco-based real estate titan, accuses WeWork of breach of contract and demands full payment. The dispute centers around WeWork’s sudden abandonment of its 311 W. 43rd St. location. The conflict began when WeWork failed to pay its December rent, leading DivcoWest to terminate the lease. WeWork is now facing the consequences as it battles with its Manhattan landlord.
But DivcoWest isn’t satisfied with just terminating the lease. It claims that WeWork owes rent for the entire duration of the original agreement, which extends all the way to 2032. WeWork argues that it had vacated the premises, but DivcoWest insists that the tenant never formally notified them of their departure. Additionally, DivcoWest points out that WeWork’s failure to remove its property from the space contradicts the actions of a company surrendering its lease, as argued in the lawsuit.
The lease signed by WeWork explicitly prohibits early surrender or abandonment without written consent from the landlord, which was never provided, as stated in the lawsuit. Prior to halting rent payments, WeWork was already in debt by $1.9 million.
This prime location, situated between Eighth and Ninth avenues, is one that DivcoWest is determined to hold onto. DivcoWest made headlines when it purchased the 14-story building for $131 million in 2018. To secure the purchase, the company obtained a substantial $91 million loan from Citizens Bank. WeWork had previously signed the lease for approximately 64,000 square feet.
This legal dispute is just one of many indications that WeWork is in dire straits. The company is desperately trying to cut costs and renegotiate its leases. With WeWork expressing doubts about its continued operation, even if DivcoWest wins the lawsuit, WeWork could find itself at the end of a long line of creditors if bankruptcy proceedings are initiated.
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