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Wework closes major office in Seoul for restructuring

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WeWork Euljiro (File photo, courtesy of WeWork Korea)

Coworking space operator WeWork Inc. is slated to shut down a major office in Seoul, once one of the largest WeWork offices in Asia, in September as a part of its restructuring in the South Korean market where the company entered in 2016.

WeWork will close WeWork Euljiro in the Central Business District (CBD) of Seoul on September 13, according to investment banking industry sources on Monday. The coworking space provider will continue to operate the other 16 offices in the capital and two in Busan.

The building Daishin 343, the headquarters of Daishin Securities Co., is set to be sold to NH-Amundi Asset Management Co. for around 660 billion won ($480.2 million). The joint venture between NongHyup Financial Group and French asset manager Amundi is planning to terminate the contract with WeWork and increase the rent for new tenants, according to market insiders.

WeWork Euljiro was launched in 2017 as the one of the biggest WeWork offices in Asia at the time, equipped with 2,400 desks.

But the leasing rate has been low as there are more conglomerates and mid-sized companies than startups and small firms in the surrounding business district. WeWork Korea terminated the contract of renting the floors from 12th to 16th storey in 2020 to save fixed cost and has been using the floors from 7th to 11th storey.

WeWork Korea sent letters to landlords of the offices it rents, requesting cutting rents or reduction in the rental area, via its restructuring advisor Alvarez & Masal Holdings LLC in February. But most landlords rejected such requests, and it was hard to transfer the rent agreements to other coworking space provider due to different business strategies, according to market insiders.

Most of the building owners reportedly did not accept the rent reduction or the request to reduce the leased area. The company also considered taking over the leased office contracts from other shared office companies, but it was not easy due to different business strategies.

WeWork filed for chapter 11 bankruptcy last November and won US court approval for bankruptcy plan last week. Under the plan, the it will eliminate $4 billion in debt and cancellation of existing equity. 

By Byeong-Hwa Ryu

hwahwa@hankyung Lee

Jihyun Kim edited this article.

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