Ahead of WeWork’s highly anticipated IPO, two cities in which the company is the largest private office tenant are bracing for the impact it will have on the real estate sector.
WeWork takes up 7.2 million square feet in New York and 4.4 million square feet in London, meaning the cities have the most to gain or lose from the company’s success or failure.
According to data from Cushman & Wakefield and CBRE, flexible offices accounted for 15% to 16% of leasing in both cities.
The coworking company is known for its rapid expansion, which has been embraced by some and left others anxious about what its large footprint could mean for the cities’ markets as a whole. Many developers and other professionals in the field are divided on whether WeWork’s business model is sound.
After the company’s IPO prospectus revealed unflattering information about it’s financial situation, some landlords were able to make a definitive decision on what to expect from the company going forward.
“[The details in the IPO prospectus] reaffirmed everything I had concerns about … They are losing about $5K per minute,” said Craig Deitelzweig, CEO at Marx Realty. “The IPO has enabled some landlords to rethink how much exposure they have in this sector and be a bit more cautious.”
WeWork has used its Moor House location in London, which was profitable two years after opening, as an example of how it can eventually turn a profit elsewhere.