LONDON - The troubles faced by co-working titan WeWork are darkening the outlook for the world's largest business hubs, where rising office vacancies are already heaping pressure on investors set to refinance big-ticket mortgages next year.
Global office vacancies are expected to climb, hurting rental prospects in cities like New York and London, eight industry executives, investors, lenders and analysts said. A WeWork spokesperson told Reuters the firm was in talks with landlords to address "high-cost and inflexible lease terms" and was striving to remain in the majority of its locations and markets.
MSCI's Capital Trends report for Europe showed third quarter volumes down 57% on 2022 levels - the lowest since 2010. U.S. industrial and office real estate investment trusts were seen 35.8% more likely to default, versus expectations a year ago.WeWork has 3.25 million square feet of space in central London, with a total annual rent roll of 192 million pounds , Jefferies said in a September note. Its biggest U.S. markets are New York and California, where it operates 49 and 42 sites respectively, according to WeWork's website.
But such a request could be problematic if the quantum and duration of rental income remain uncertain.