WeWork is in the process of renegotiating the majority of its global leases following concerns about its financial stability. The company aims to reduce lease costs it deems out of sync with current market conditions. As of June, WeWork operated in 777 locations across 39 countries, with long-term lease commitments exceeding $13 billion. This move poses challenges to the commercial real estate sector, which is already grappling with excess capacity due to remote work trends. WeWork's shares have plummeted by 98 percent over the past year, raising doubts about its future. Despite this, the company insists it is here to stay, albeit with revised lease agreements.
WeWork, a major player in the office space industry with backing from SoftBank, is presently actively negotiating to amend its leases globally. This development comes on the heels of WeWork's recent warning that its continued existence is in question. The company's primary objective is to reduce lease expenses that it considers significantly misaligned with prevailing market conditions. This decision has consequences for the commercial real estate sector. It is currently contending with an oversupply of office space driven by the surge in remote work during the COVID-19 pandemic.
As of June, WeWork maintained a presence in 777 locations across 39 countries, with long-term lease commitments exceeding $13 billion, with most maturing in or after 2028. WeWork made this announcement after strongly encouraging its landlords to participate in an important business update conference call. During this call, David Tolley, the CEO of WeWork, conveyed that the company planned to exit certain "unsuitable and underperforming" locations while maintaining its presence in the majority of its properties. In a subsequent statement, Tolley emphasized that WeWork was taking immediate action to address its inflexible and high-cost lease portfolio, which he attributed to a period of unsustainable hypergrowth.
WeWork has been actively working to reduce its long-term lease liabilities for several years, dating back to when its former CEO, Adam Neumann, resigned after a failed attempt at an initial public offering in 2019. Simultaneously, landlords have been seeking ways to minimize their exposure to WeWork, a company that holds a significant share of the office space market in cities ranging from New York to London. In recent weeks, WeWork has appointed several bankruptcy experts, raising concerns about its financial stability. Other flexible office space providers have reported increased inquiries from WeWork customers since the company's going concern warning in August.
These developments could potentially contribute to a widening gap between modern, high-quality properties and older, less desirable ones, particularly in the New York market. While WeWork once accounted for nearly a quarter of new leasing activity in New York in the first quarter of this year, some industry insiders downplay the potential impact of its bankruptcy, characterizing it as a small part of the overall market. WeWork currently occupies approximately 6.4 million square feet of office space in the 414 million-square-foot Manhattan office market. Nonetheless, certain landlords have taken precautionary measures.
For instance, in 2021, Spanish bank Santander signed a lease for 160,000 square feet of space at 437 Madison Ave., a location previously held by WeWork. While the rent was slightly lower than what WeWork paid, it allowed the building's owner, Sage Realty, to reduce its exposure to WeWork. Over the past year, WeWork's shares have plummeted by 98 percent, a stark contrast to its previous private market valuation of $47 billion. WeWork's equity is now valued at less than $200 million. However, Tolley has stated that the ongoing lease negotiations will have no impact on WeWork's day-to-day operations, firmly asserting that WeWork is here to stay and determined to secure its place in a changing market landscape.
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