WeWork drift: considerable risks for Montreal

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The dismantling of the American company WeWork, whose bankruptcy is again feared, could have “considerable” consequences in the already fragile office market, in Montreal and the rest of Quebec.

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“This situation, without a doubt, could have negative consequences on the market,” estimates Mathieu Turnier, associate vice-president of Colliers real estate. The simultaneous closing of all their downtown locations would be the pure and simple closing of a large headquarters in Montreal.”

Last week, the Wall Street Journal argued that the company specializing in the rental of work spaces, with which the real estate subsidiary of the Caisse de dépôt et placement du Québec (Ivanhoé Cambridge) has already joined, is preparing to declare itself in competition creditors

Since then, shares of WeWork, which already avoided bankruptcy in 2019, have started to fall again on the New York Stock Exchange. This downward trend has been maintained for years. Its share price has lost nearly US$55, or 98% of its value, since January 2023.

The equivalent of Intact

Mr. Turnier acknowledges that WeWork’s footprint is smaller here than in cities like New York, London, Paris and even Toronto. But its presence is significant enough, he believes, for its eventual withdrawal from the Montreal ecosystem to leave its mark.

Mathieu Turnier, Associate Vice President of Colliers International, Quebec.

Photo courtesy of Cortez Design Visuals

WeWork currently operates four coworking spaces in Montreal, including the largest (120,000 square feet).²) is located in the Dominion Square building on Sainte-Catherine West at the corner of Peel and Metcalfe streets.

Adding its three other commercial establishments, at Place Ville Marie, L’Avenue Tower and Saint-Antoine West near the Palais des Congrès, WeWork alone occupies nearly 300,000 square feet.² area in downtown Montreal (see table).

This is equivalent, by way of comparison, to the area occupied by the headquarters of the insurance company Intact. The insurer occupies a little more than half of the 26-story (500,000-foot) tower of the same name.²), the old University 2020, located on the corner of Robert-Bourassa and De Maisonneuve Ouest.

Owners at risk

In the opinion of the Colliers expert, a negative absorption of this office space, the equivalent of 1.3% to 1.5% of the real estate park in downtown Montreal, only could have negative consequences on the income of the building. affected owners.

This is the case, among others, of Canpro Investments, owner of the Plaça del Domini building. Not less than 120,000 feet² they are employed there by WeWork. This is also the case of Ivanhoé Cambridge, subsidiary of CDPQ, owner of Place Ville Marie. One of its tenants, WeWork, occupies 75,000 square feet.².

With great financial difficulties, the American company is also the tenant of several more towers owned by Ivanhoé Cambridge. If it refused, for reasons of competitiveness, to reveal the leases that bind it to WeWork, it confirms that they refer to several of its buildings in the United States, specifically located in New York, Chicago, San Francisco and Austin .

– With the contribution of Sylvain Larocque