Co-working

Fretting? We Work’s travails may offer an opportunity

It appears WeWork has expanded too fast, too far and wide, and too thinly. Whereas the product models, of both WeWork and WeLive, are most definitely finding favour with consumers, the financing model is becoming ‘problematic’.

Why WeWork’s problems have London landlords fretting

At the UK headquarters of office space company WeWork, the skateboard half-pipe is empty, the arcade machines aren’t in use and the DJ turntables are motionless. It could be because it’s 11am on a grey weekday in London, or it could be because this fast-growing company has suddenly found itself in crisis mode.

WeWork has pulled their much vaunted flotation amid signs their expansion has been overly aggressive. With the back-loaded nature of the agreements they have signed, there are rumours WeWork will run out of cash in 2020 unless one of their major backers provides more working capital. Of course, additional funds cannot be ruled out, and are probably likely, but when a flotation at around $47bn is pulled, with the share price receding so the company valuation is now closer to $10bn, some ‘restructuring’ looks inevitable.

WeWork is undoubtedly the most significant driver in this market but perhaps their short term problems open a window of opportunity for others to follow an adapted model. Their co-working product works well. Their co-living product is less well tested. Opportunities abound for agile entrants to hone the commercial model, using the best of the proven product strategies with a more secure financing structure. It feels like there is a significant opportunity, right now, to catch up and nip at their heels.