WeWork ends portfolio review, keeps 4 out of 5 assets in Milan

Coworking is alive and well, according to WeWork. The group has finalised its portfolio review, as it exits from Chapter 11 bankruptcy on 30 May, and is retaining some leases in what it calls “its strongest and most popular locations”, which include Italy.

WeWork is keeping four out of its five assets in Milan: these are the best-performing offices in via Meravigli, via Pisani, via San Marco and via Mazzini. Only its via Turati asset has been declared financially non-viable.

In total, WeWork has 3,500 desks in Milan and 250 companies renting space ranging from small start-ups to large established businesses. Such a mix of tenants is a positive, according to the group, as diversification creates resilience and bodes well for the future.

During the portfolio review WeWork has renegotiated leases with landlords to cut its expenses – achieving as much as 10% savings in most cities, including London – as part of its plan to return to profit next year.

In Milan, however, the company has not managed to renegotiate leases, as rental prices remain high, but it has chosen to stay in Italy’s business capital anyway because it sees strong and growing demand.

“Occupancy rates have continued to increase in the last few months, with a +12% recorded between Q4 2023 and Q1 2024,” said Rebecca Nachanakian, general manager Southern Europe, Benelux and Nordics, WeWork. “We now expect 20% growth this year. We are grateful to our clients, partners and landlords in Milan who have been very supportive in helping us optimise our portfolio for the long-term.”

On a global level, WeWork expects to end this year with an occupancy rate of 76% which, according to its forecasts, will increase to 85% by the end of 2028.

The company was founded in 2010 and experienced rapid growth in the following decade. It was valued at $47 billion before the Covid pandemic hit the business and it declared bankruptcy in November 2023.

Following its portfolio review, WeWork expects to reduce its total rent commitments by over $11 billion globally. WeWork expects to continue to operate across over 170 locations in the United States and 337 locations globally, which include key European cities like Paris, Madrid, Lisbon, Brussels, Munich, Prague and Stockholm.