Though its business faced serious challenges prior to the global pandemic, WeWork continues to flounder as America’s downtown landlords struggle to fill vacant offices. With its share price hovering around $0.13, WeWork made a subsequent announcement on August 18, declaring a planned 1-for-40 reverse stock split in an effort to remain compliant with the New York Stock Exchange’s listing requirements.

The potential demise of WeWork would add another fissure to a complex and changing commercial real-estate landscape. The shift to hybrid working arrangements ushered in by COVID-19 led to a substantial increase in office space supply and rapidly shifted the needs of tenants.

In a market that is heavily financed by debt, the steep increase of interest rates has regulators and investors alike concerned that just one major domino toppling could cause systematic shock. Those fears have been stoked by international harbingers with China enduring a property crisis of its own. Country Garden Holdings (2007 HK), one of China’s largest developers facing default, was the issuer to generate the most APAC corporate debt lending revenue in the first half of 2023. Shares in Country Garden Holdings remain 94% utilized.

Despite substantial reasons for concern, many commercial developers have managed to stay on course thus far. In WeWork’s home base of New York, Orbisa data suggests moderate lending activity for comparable firms. The following chart compares WeWork to four of the largest publicly traded commercial landlords in New York as of August 21. SL Green has the highest Short Interest Indicator, the percentage of on-loan shares relative to the total public float, but has also experienced the greatest cooling in terms of the cost to borrow shares over the previous month.