{"id":17997,"date":"2018-09-27T18:06:25","date_gmt":"2018-09-27T15:06:25","guid":{"rendered":"https:\/\/www.commercialcafe.com\/blog\/?p=17997"},"modified":"2026-04-07T14:40:18","modified_gmt":"2026-04-07T11:40:18","slug":"coworking-spotlight-will-boom-bust-wework","status":"publish","type":"post","link":"https:\/\/www.commercialcafe.com\/blog\/coworking-spotlight-will-boom-bust-wework\/","title":{"rendered":"Company Spotlight: WeWork"},"content":{"rendered":"

WeWork is one of the world\u2019s largest coworking<\/a> operators. In July 2017, it was valued at <\/span>a whopping $20 billion<\/span>, making it the sixth most valuable startup in the world and the <\/span>third-biggest startup by valuation<\/span> in the U.S., after Uber and Airbnb.<\/span><\/p>\n

There are even industry rumors <\/span>its valuation could soon double<\/span><\/a> to $40 billion – but some analysts question whether it\u2019s just <\/span>a traditional real estate <\/span>h<\/span>oldings company<\/span> in disguise, as opposed to a true Silicon Valley unicorn. <\/span><\/p>\n

WeWork\u2019s co-founder and CEO Adam Neumann is bullish when questioned about the true value of his business. In a recent interview <\/span>for Wired magazine<\/em>,<\/span><\/a> he listed a number of prominent investment firms,<\/span>\u00a0including the likes of Benchmark Capital, Fidelity Investments, Goldman Sachs, Harvard Management Co., Hony Capital, JP Morgan, T Rowe Price, and Wellington Management. <\/span><\/p>\n

In August 2017, WeWork also got a $4.4 billion cash injection from SoftBank and <\/span>reportedly raised<\/span> an additional $1 billion in debt from the Japanese giant 12 months later. <\/span><\/p>\n

\u201cWhen the best investors all agree on the same company, trust me that they\u2019ve done their math, they know our returns, they know exactly what Wall Street pays when a company goes public, and they are sure that they are going to get a return,\u201d stated Neumann for Wired magazine.<\/span><\/p>\n

A brief history of WeWork<\/h4>\n

The first WeWork space opened in Manhattan<\/a> in 2010. Now, an estimated 210,000 members flock to its <\/span>453 office locations in 87 cities<\/span> around the world. <\/span><\/p>\n

Some industry experts question whether WeWork\u2019s rapid growth is sustainable, especially considering the amount of cash the company burns to fund its expansion.\u00a0<\/span>Last year, WeWork \u201clogged a net loss of $933 million and it is on pace to easily surpass that figure this year,\u201d according to <\/span>the Wall Street Journal<\/span><\/a><\/em>.<\/span><\/p>\n

Whatever your opinion, WeWork\u2019s rise to dominance in the coworking industry<\/a> has been nothing short of meteoric. So, what\u2019s the story behind its success?\u00a0<\/span><\/p>\n

On paper, <\/span>WeWork\u2019s business model<\/span> is relatively simple. The U.S. company provides shared workspaces and offices to freelancers, startups and, increasingly, established enterprises. It takes on large commercial leases<\/a>, revamps the space in its signature style, and then rents out the space in small chunks and on a flexible basis.<\/span><\/p>\n

WeWork members get access to its global empire of spaces. There\u2019s a heavy emphasis on the aesthetics of each space, which are carefully designed to bring in natural light and encourage collaboration and synergistic growth.<\/span><\/p>\n

WeWork claims it has used <\/span>12 million square feet of glass<\/span><\/a>, 750,000 square feet of carpet, 8.8 million square feet of white oak flooring and 9.6 million pounds of aluminum between 2010 and 2017. It’s also installed 12,000 phone booths.<\/span><\/p>\n

A WeWork space offers a range of traditional coworking amenities. This includes super-fast internet, breakout areas, printers, free refreshments, onsite 9-to-5 staff and private phone booths. There is also a vast range of events, from lunch and learns to networking events, or fitness and wellness classes.<\/span><\/p>\n

It\u2019s cookie-cutter coworking at its very best. But WeWork is also diversifying and extending its reach beyond the flexible workspace arena.<\/span><\/p>\n

A corporate shift<\/h4>\n

WeWork counts 20,000 companies as its customers and its fastest-growing demographic are businesses with <\/span>1,000 employees or more<\/span><\/a>. In fact, <\/span>22% of Fortune 500 companies<\/span> are currently WeWork members, including Microsoft, Salesforce, Dell and Deloitte.<\/span><\/p>\n

WeWork also manages exclusive offices for a handful of its large corporate clients. <\/span>IBM<\/span>, for example, has 40 desks in a dedicated space in a Chicago<\/a>-based WeWork building, which is officially called the Cognitive and Advanced Analytics Garage. <\/span><\/p>\n

According to <\/span>WeWork\u2019s 2018 Economic Impact Report<\/span>, 40% of enterprise members chose WeWork because they wanted a more creative and entrepreneurial environment and 30% of enterprise members have WeWork offices in multiple cities. <\/span><\/p>\n

Facebook is also jumping on the WeWork bandwagon with gusto. WeWork’s two upcoming eight-story office buildings in Mountain View will represent its largest space, with a combined floor space of 450,000 square-feet. Facebook will be the sole occupier<\/a> of both spaces,<\/span>\u00a0despite WeWork\u2019s original plans to lease one building to Facebook and leave the other for smaller clients. <\/span><\/p>\n

Next step, WeWorld domination?<\/h4>\n

WeWork plans to take its business models for workspaces and extend their ethos across multiple industries to create a generic and all-encompassing \u201cWe membership\u201d. This will give members access to far more than just its shared workspaces. <\/span><\/p>\n

For example, WeWork has already launched two \u201c<\/span>WeLive<\/span>\u201d locations in New York City and Washington, D.C., where members are part of a \u201cco-lisiving\u201d venture with furnished apartments, access to a gym and spa and other communal spaces. There\u2019s even a \u201c<\/span>WeGrow<\/span>\u201d for-profit school that promises to provide a \u201cconscious entrepreneurial approach to education\u201d.<\/span><\/p>\n

WeWork has also started to buy commercial real estate, including <\/span>New York City<\/a>\u2019s iconic Lord & Taylor building<\/span>, which it plans to turn into its global headquarters. In April 2018, WeWork also took <\/span>a \u00a358 million stake<\/span> in a site in London\u2019s Devonshire Square, which is its third property acquisition in the U.K. capital.<\/span><\/p>\n

WeWork has also been embroiled in a poaching sage recently.\u00a0Reportedly<\/a>,\u00a0<\/span>it is \u201coffering commercial real estate brokers worldwide a 100% commission on the first year of rent paid by any tenant who switches to WeWork from a top competitor and signs a lease by October 1st. Tenants also get half off the first year\u2019s rent if they sign for at least 12 months.\u201d<\/span><\/p>\n

Who knows what steps WeWork will next take to cement its dominance in the coworking industry, wider commercial real estate sector or an as-yet-unknown range of sectors and industries it also may be eyeing. <\/span><\/p>\n

However, before it gets too carried away, WeWork may need to get its books in order. While it is starting to show \u201cearly signs of financial improvement\u201d according to <\/span>a recent report<\/span><\/a> in Bloomberg, critics still say the company \u201cis overvalued and spends with abandon\u201d.<\/span><\/p>\n

\n
\n
It\u2019s an interesting time for WeWork and while its sky-high valuation is likely to come back to earth at some point, the company may also manage to attain entirely new levels of cross-sector dominance.<\/div>\n<\/div>\n<\/div>\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

WeWork is one of the world\u2019s largest coworking operators. In July 2017, it was valued at a whopping $20 billion, making it the sixth most valuable startup in the world and the third-biggest startup by valuation in the U.S., after Uber and Airbnb. There are even industry rumors its valuation could soon double to $40…<\/p>\n","protected":false},"author":202,"featured_media":18134,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37,2256,2547],"tags":[],"class_list":["post-17997","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-real-estate-news","category-coworking","category-resources","wpautop"],"acf":[],"yoast_head":"\nCompany Spotlight: WeWork - CommercialCafe<\/title>\n<meta name=\"description\" content=\"WeWork transformed how the world works \u2014 and made headlines for other reasons. 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