WeWork is slowly stemming the tide of net losses, but another tough quarter has it searching for more savings. The flex work giant will shutter 40 locations across the U.S. The company declined to say which sites will be closed, but it will amount to an estimated 15 percent of the currently listed 242 consolidated locations in the states. CEO Sandeep Mathrani said during the company’s third-quarter earnings call, the locations singled out for closure were picked because they didn’t meet design criteria, were obsolete, or were situated in a market with oversupply.
WeWork expects to pay about $200 million over the next 15 months to exit the leases, but they’ll get cost savings down the road of about $140 million. Most of the closures will happen this month, though a few might happen in January. The average term remaining on the leases for the soon-to-be-closed locations was 10 years, and average occupancy was about 42 percent, well below WeWork’s third-quarter consolidated physical occupancy rate of 71 percent. WeWork’s membership numbers rose this past quarter, and its occupancy rate increased, but it wasn’t as high as the flex space operator had hoped.
The company’s struggles continued in the third quarter even though prospects are looking better for the flex space and co-working industry lately. WeWork’s net loss in the third quarter was $629 million compared to $844 million in the third quarter of 2021. Nevertheless, demand hasn’t come back as “swiftly” as WeWork thought it would, according to Mathrani. WeWork has lost more than $12 billion since the end of 2018 and its near-collapse in 2019, and while its financial situation has improved, it still has a way to go until it can get out of the red ink.