Can Ark Help Support WeWork’s Business Model?

WeWork’s current model is a familiar one: it signs long-term leases, transforms them into office spaces, and then leases out desks and private offices to professionals on a short-term basis.

Although the nine-year-old company claims this model to be immune to an economic downturn, there is no concrete proof to back this up.

The company has a massive footprint all over the world and is currently the largest private tenant in New York City, Washington D.C., and Central London. Although its large presence allows it to easily close locations that are not profitable, it can also decrease their value.

Now, with the announcement of the company’s new real estate investment branch Ark, it seems that the company could be losing focus of its core. Ark will take over the existing $1.8 billion property portfolio of WeWork Property Advisors, as well as CEO Adam Neumann’s properties.

This model allows WeWork to avoid paying a lease that affects its income statement and reduces its losses, but very much changes its business model.