WeWork was once seen as a triumphant leader of coworking spaces, leasing millions of square feet all across the world. After the company’s S-1 filing came to light, a different picture was been painted.
WeWork become New York City’s largest office tenant, surpassing JPMorgan Chase, last year with nearly 8.9 million square feet of office space across over 100 locations in Manhattan. As the company continues to downslope, could the real estate industry be in trouble?
Overall, the company’s downfall is not expected to have a significant impact, but it could change how flexible office spaces are leased and occupied.
Among the details that were scrutinized were the company’s rapid growth business model and losses of $1.3 billion in the first half of the year. This, along with several other investor concerns, led co-founder Adam Neumann to step down as CEO and to the postponement of the IPO.
Despite the questionable business model, real estate experts believe coworking is here to stay regardless of WeWork’s outcome. This could include more landlords building out their own flexible workspaces and cornering the market.
“In the past it has been through third-party flexible office operators in very traditional lease agreement formats,” said Julie Whelan, head of occupier research for the Americas at CBRE. “There are some landlords that have the ability to conduct the offering on their own. There are others that want to get into partnership agreements. That way they have more control over the space and, frankly, the benefit of it in upside scenarios.”
