The We Company has officially filed its paperwork for its highly anticipated initial public offering, and the commercial real estate industry are keeping a sharp eye as the outcome could affect the market as a whole.
Currently, WeWork serves as the largest coworking company in the U.S., so the CRE sees its public offering as pivotal to the future of the young coworking sector.
“If the IPO is successful, there will be incremental demand increases around commercial real estate,” said Alex Snyder, a CenterSquare analyst. “WeWork tends to grow like a weed and the only thing stopping them from doing that is capital.”
If the IPO is unsuccessful, Snyder and other analysts foresee the CRE market taking a big hit as the sector has contributed to much of the industry’s growth in recent years.
One of the revealings from the S-1 filing was the company’s $47 billion in committed lease obligations and $4 billion in committed rents. Jeffrey Langbaum, a Bloomberg Intelligence analyst, said that this mismatch could cause locations to shut down. What is still uncertain is how much cushion the company has built up and if it can afford to lose occupancies.
The S-1 filing did reveal that the We Company had better margins in its larger markets, but other concerns such as its $47 billion valuation are leaving analysts skeptical.
Still, if the IPO is deemed unsuccessful, it may not be the end-all for the coworking sector.