WeWork Exits SXSW Center Amid Downtown Austin Office Woes

As WeWork undergoes bankruptcy and looks to reject dozens of leases across the country, it has escaped one lease in Austin.

Three floors that the coworking giant formerly leased at 1400 Lavaca Street are back on the market. The 65,550-square-foot spread is up for direct lease, not sublease. The company signed a deal to exit the space during a cost-cutting binge in October, a month prior to entering bankruptcy.

“We made the difficult decision to stop operating at WeWork SXSW Center last October,” a company spokesperson said. “Austin continues to be a priority market for WeWork.”

The office building is owned by CZ Properties, an LLC that traces back to South by Southwest, a massive arts and business festival held in Austin each year. The glass-walled, 13-story property was built in 2019 and covers about 157,000 square feet. With WeWork’s exit, the building is 58 percent leased, according to data from Partners.

Greenbelt Commercial, an Austin-based developer founded in 2013, built the property. It was appraised at $84 million for tax assessment last year.

Matt Frizzell and Brian Liverman of Cushman and Wakefield are marketing the space.

While WeWork has pulled out of the SXSW Center, its unraveling has not had as heavy an impact in Texas as it has in other states. The company accounts for just under 14 percent of Houston’s shared workspaces.

“Texas is in much better shape than other states in terms of exposure to WeWork,” said Steve Triolet, a research and market forecasting expert at Partners.

Elsewhere in downtown Austin, WeWork had locations at 600 Congress Avenue and 316 West 12th Street. It also operated south of Town Lake, at 801 Barton Springs Road, and farther north, at 3300 North Interstate 35, 11801 Domain Boulevard and 10900 Stonelake Boulevard.

The company also held seven leases in Dallas.

In September, just before filing for bankruptcy, WeWork told its landlords it planned to renegotiate nearly all of its leases. The SXSW Center exit was part of that trimming effort.

Austin’s office market has been battling severe leasing problems all year, with record sublease availability and vacancy rates. The central business district has been hit particularly hard, with none of the year’s top leases being signed downtown.