WeWork won’t be coming to Baltimore, after all.
The coworking company’s lease for the top two floors of an under-construction building at Harbor Point was terminated after it “mutually” agreed with Armada Hoffler Properties, the Virginia Beach-based real estate company that oversees the Wills Wharf development, about the move, the firms said on Tuesday. It ends plans for what would have been the first Baltimore coworking space from the well-known and once highly valued company that became synonymous with tech expansion before hitting turmoil that has led it to pull back in many areas.
“We are pleased to have reached a mutually beneficial outcome with WeWork regarding the top two office floors of Wills Wharf,” said Louis Haddad, president and CEO of Armada Hoffler Properties.
WeWork was heralded as the anchor tenant for the new property that would add to the waterfront development that’s already home to the Exelon tower. It initially announced plans in 2018 to move into Baltimore with a lease for 69,000 square feet, and a targeted opening of 2020. In a city that is already home to a number of mostly homegrown coworking spaces, WeWork was set to make a grand entrance with a space overlooking the harbor and room for 1,100 members in a mix of communal workspace and private offices.
But the company’s glitzy growth came to a halt in the fall of 2019 after questions about its business model led it to put a hold on IPO plans, and cofounder Adam Neumann stepped down as CEO. Amid the fallout, it laid off 2,400 workers in November of 2019 and began a 90-day plan to divest from “non-core businesses” it had bought including Meetup.com and women-focused coworking space The Wing. Then came the pandemic. The closures to stop the spread of COVID-19 have challenged many offices, and WeWork has sought concessions on its leases, even as it has sketched out new social distancing-friendly layouts.
The opening of the Baltimore location still appeared to be in motion in December, when WeWork held a launch party and began to offer tours of the still-unfinished space at Wills Wharf. However, doubt started to appear in May, when the Baltimore Business Journal reported that Haddad told an earnings call that it was renegotiating leases with WeWork in Baltimore and Atlanta in a move to “limit our exposure to this tenant.”
If you take the brand out of it, it doesn't necessarily say much about how Baltimore is adapting the global trend of coworking. The city's coworking community is already here, and very much growing.
WeWork has also continued to pull back, with reports of another 1,000 layoffs expected, and another sale, this time of coding bootcamp Flatiron School, coming last week. It appears the Baltimore location was a fit with the real estate side of the business model, but not the current pace of expansion.
“As we refocus on our core business and work with our landlord partners around the world to optimize our real estate portfolio, WeWork has decided to terminate its planned lease at Wills Wharf,” said Dave McLaughlin, WeWork general manager for the Atlantic, in a statement. “We are grateful to Armada Hoffler Properties for their ongoing partnership throughout this process to find a solution that worked for everyone involved.”
While it was a highly touted, WeWork is not the only tenant to sign on at Wills Wharf. Digital marketing agency Jellyfish, which bases U.S. operations in Baltimore, is signed on, as well as accounting firm Ernst & Young, and child care provider Bright Horizons. In all, the property has 325,000 square feet of Class A office space. Haddad said the company is in “active negotiations” to lease the remainder of the building’s square footage, including the space WeWork had planned to take.
“Wills Wharf is a prime destination for office tenants looking to upgrade their space and relocate to the dynamic Harbor Point neighborhood,” Haddad said.
There’s no doubt that the entrance of WeWork would’ve been offered as a prime example of a name brand picking Baltimore. Leaders eager to lure big companies to the city could’ve posted a big economic development win. But if you take the brand out of it, it doesn’t necessarily say much about how Baltimore is adapting the global trend of coworking.
The city’s coworking community is already here, and very much growing. There were more than 25 spaces on our 2020 coworking guide for Baltimore, which was up from the prior year. While they vary in size and approach, a common thread is that most of them were started by Baltimore-based teams. WeWork would’ve been the largest space on that list in size and perhaps the most recognizable name, but the city was already well on its way to growing the model, with a notable trend over the last couple of years of spaces moving into neighborhoods away from the harbor and more focused spaces around areas like design, making and arts. Rather than going bigger, perhaps one lane to think about coworking in Baltimore is that it is getting more focused as it matures.
For its part, WeWork will still have a location in Maryland, as it opened a space at the University of Maryland in College Park last year.
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