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Jeremy Fennema – Tech Innovation Alchemist
According to rating agency DBRS Morningstar, WeWork’s future is “questionable” due to its series of unfortunate events and the cultural shift to working from home.
“The coronavirus’ effect on the economy will take time to truly understand; however, DBRS Morningstar expects WeWork to struggle with potential disruptions to the office space in the aftermath of the pandemic,” said Steven Jellinek, the vice president of North American CMBS for DBRS Morningstar.
In order to alleviate the damage caused by members leaving WeWork locations due to financial constraints, the company will have to cut down on lease liabilities.
The agency also predicts that increased unemployment and high office vacancies will lead to more employees opting to work from home until there is a vaccine, which could be detrimental to WeWork.
Still, WeWork CEO Sandeep Mathrani has remained confident that the company is well-positioned post-pandemic as organizations look into flexible work solutions in the future.
“We’re on our path to profitability to 2021,” said Mathrani. “My focus is to right this ship.”
In order to become profitable, the company will need to renegotiate its leases and transition into profit-sharing agreements. However, DBRS Morningstar’s report found that many landlords won’t be interested in negotiating with WeWork because it’s “revenue would take a significant hit.”
