IWG (LON: IWG) share price will be in the spotlight on Wednesday as the co-working space business braces for its biggest news this year. The shares have been under relative pressure in the past few months. They were trading at 132p on Tuesday, down by over 33% from the highest point this year.

The business world is going through major changes as central banks leave interest rates at the highest level in over two decades. In the United States, the Federal Reserve is expected to leave rates unchanged between 5.25% and 5.50% when it concludes its meeting on Wednesday.

High interest rates coupled by higher inflation has pushed more companies to slash their operation costs. Many, including popular blue-chip firms like Meta Platforms, Netflix, Microsoft, and Google have all laid off staff.

As a result, the commercial real estate industry is going through major challenges as many leading REITs approach a wall of maturities. It is against this backdrop that WeWork, a company that boomed in an era of low-interest rates, is now preparing for bankruptcy.

WeWork has a mountain of liabilities. It has over $2.9 billion in long-term debt and over $13 billion in long-term leases. By filing for Chapter 11 bankruptcy, the company hopes to reorganize its finances.

WeWork’s bankruptcy filing marks a major reversal of fortune for a company that thrived in the era of low-interest rates. At its peak, the company was valued at over $45 billion, helped by Masayoshi Son, the head of Softbank. 

WeWork’s collapse is not because of lack of demand for co-working space. While the industry has slowed, WeWork’s business has been growing. In the most recent quarter, the company’s revenue rose by 3.5% to $844 million.

Instead, WeWork’s challenge was that it had a mountain of liabilities at a time when interest rates were surging.

WeWork’s woes could benefit IWG, its biggest rival, which owns brands like Regus, OpenOffice, DoJo, and HQ. It could lead many big companies that use WeWork to move to IWG, a company that has a presence around the world.

The most recent results showed that IWG was doing well. Its revenue for the first half of the year surged to a record £1.6 billion. Its EBITDA jumped by 48% to £198 million while its cash flow from business activity rose to £162 million. 

The company also reduced its debt to £658 million. Most importantly, it boosted its balance sheet by refinancing its debt facilities until Q4 of 2025.

IWG has survived for years because of its business model. Unlike WeWork which holds leases, IWG uses a hybrid model, which makes it an asset-light business. It owns some of its locations while the others are owned by franchisees.

Therefore, there is a likelihood that the IWG share price will do well after WeWork’s exit. For one, it could lead to more demand as companies look for alternatives. 

However, the risk for IWG is that the tech scene is much different from what it was during the era of low rates. Venture Capital funding has dwindled, meaning that tech companies are not thriving. 

At the same time, large companies have embarked on cost controls as they focus on profitability. 

Worse, IWG shares have formed a slanting double-top pattern on the weekly chart and are now trading at the neckline. This means that the shares will likely remain under pressure as traders target the pandemic low of 101.90p. This price is about 23% below the current level.

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