CoStar-WeWork dispute opens door for coworking competitors

One of the most disrupted sectors in Northern Virginia since the pandemic has been office space, as many white-collar workers work remote or hybrid schedules, leading to less demand.

On top of that, in Arlington County’s Rosslyn corridor, WeWork clients have had to deal with the coworking company’s uncertain future. Although WeWork was set to exit Chapter 11 bankruptcy in mid-June, it’s been unclear whether it will remain a tenant at the 1201 Wilson Blvd. building, which CoStar Group purchased for $339 million in February as its new corporate headquarters.

In recent months, CoStar has been in court, trying to get WeWork to vacate and claiming WeWork didn’t pay rent promptly. That could leave room for WeWork competitors offering more stability.

At nearby Office Evolution Arlington-Rosslyn, owner Trey Hardin’s phone has been busy. “We have been contacted by several WeWork members recently — all who want out and a new, reliable home for their business,” he says. “The common sentiment we are hearing is that, ‘WeWork has given up and is checked out.’”

Hardin also notes that coworking demands have evolved. “Customers are no longer seeking an office for a week or a hot desk for a day. They either want true commercial space with unprecedented flexible terms and pricing, or they want dedicated offices in coworking centers on longer term agreements with specialized member services.”

Office Evolution client Ron Prater, chief operating officer of Alexandria-based technology business Bent Ear Solutions, says he and his colleagues “looked at many coworking spaces. Many had tons of frills — tons of open space, networking events at night, etc. — but were not conducive for our work.”

Arlington Economic Development Director Ryan Touhill says the CoStar-WeWork dispute, which the two sides’ attorneys declined to comment on, is a “private matter between a landlord and tenant and does not reflect broader commercial real estate market trends.”

However, Touhill also sees change in the market. “We are observing a trend toward ‘flight to quality,’ which bolsters the appeal of premium office buildings,” Touhill says. “This trend is driving strategic investments in various forms: renovating and repositioning existing office spaces, planning full redevelopments into alternative uses, and constructing new high-end office buildings. Arlington is actively developing guidelines for adaptive reuse, where building owners convert office spaces into alternative uses such as residential units or hotels.”