WeWork will run out of cash in the next five months since it would be ludicrous to throw more cash into a business model that has no path to profitability. It has become abundantly clear that their business model isn’t feasible; there is simply not enough demand to justify the supply - let alone the rate at which it’s burning through cash.
They will likely end up defaulting on 75%-80% of the leases in New York City in order to preserve cash and save the company from disintegrating in an even shorter period of time. Most of WeWork leases were signed using a single-purpose-entity with no assets (or shell Corp) with the parent company giving a 1-2 year guarantee. This means that they can “walk away” without material short-term consequences.
Landlords are going to be in trouble since the WeWork layouts they’ve invested millions in are essentially unusable for most regular office tenants.
My guess is that a number of WeWork competitors (Spaces, Knotel, Convene, The Yard, etc.) will jump in and scoop up 20%-30% of these soon-to-be-vacated spaces. I think another 10%-20% will be absorbed by other companies who have the ability to work with a similar layout using minor modifications.
That leaves 50%-70% of WeWork’s 2 million+ square feet sitting in the market offering no income to these landlords. This will certainly place significant downward pressure on sublease prices (since bargain hunters who normally look for value in subleases will look to this million+ square feet new market of spaces) which in turn will put downward pressure on the price per square foot of direct deals.