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WeWork, the shared office provider once valued at $47bn (£37bn), has warned it is at risk of bankruptcy as employees continue to work from home.

Shares in the flexible workspace provider plunged after it said in a statement on Tuesday that “substantial doubt exists about the company’s ability to continue”.

David Tolley, interim chief executive of WeWork, blamed the firm’s woes on the oversupply of offices.

He said: “Excess supply in commercial real estate,

Excess supply is a nice way of putting it. All those leases signed on property that’s declining in value…..

9 thoughts on “Again?”

  1. Surely if you’re leasing, it doesn’t matter if the underlying asset is declining in value. In fact, you want that to happen so that you can point out to your shareholders how clever you were by leasing instead of taking on debt to buy those depreciating assets.

    The problem is that they’re paying leases but can’t cover the cost of doing so by subletting — which is their business model — and that’s an entirely different (if not unrelated) problem!

  2. Interesting.

    My son is in the same business in London. “Working from Home “ has been a boon to him as companies scramble to have smaller offices on flexible terms at 3x the sq/ft rent compared to standard leases.

  3. WeWork is Regus plus bullshit. And Regus has tended to struggle during a downturn.

    Admittedly that bullishit duped Softbank and a few other PE ‘geniuses’ and made Adam Neumann a billionaire, so perhaps I am just jealous.

    The WFH trend is overstated. It’s serious in the large cities of the USA, because their CBDs are dangerous shitholes. Canary Wharf is having a bit of a wobble but is doing quite well in becoming home to more diverse property uses. WFH is also a popular in the UK public sector, although the W is questionable there.

    Meanwhile, the offices in Seoul and Singapore etc are full…

  4. WFH should benefit businesses like WeWork, as companies ditch their 500-seat head offices and downsize to 50 seats in the local Regus.

  5. WFH has lowered the already lousy service one had come to expect from HMRC, local authorities and utility providers to previously unimaginable levels of incompetence.

    NHS-style barely functional is the new norm.

  6. Chris Miller,

    “WFH should benefit businesses like WeWork, as companies ditch their 500-seat head offices and downsize to 50 seats in the local Regus.”

    Doesn’t that also mean that all those 500-seat head offices become 10×50 seat buildings, though, increasing the competition against them?

    I never quite understood what the point of WeWork was. It doesn’t seem to be the case that scale would lower prices or raise quality of office space in the way that it does with cars, supermarkets or software. It’s more like hairdressing or car maintenance.

  7. A wealthy friend of mine who advises real estate investors told me a while ago that during COVID tenants whose leases were coming up were opening negotiations with their landlords along the lines of “We want a three year rent holiday and for you to pay 50% of our business rates. If you don’t, we’re leaving”. He thinks the rest of this year will be a complete bloodbath in commercial property

  8. Western Bloke. I’ve been in a couple of WeWork sites for meetings. Basically, young people liked them. The ones I was in were pretty noisy, but there were common conference rooms, decent coffee was avaialble, and occasionally there would be presentations regarding raising capital, deal structure, and stuff like that. Much like an incubator. WeWork’s business model made no sense, but for the kids working in one, the rent was cheap enough, you might actually learn something, and the odds of getting laid by someone you meet at work were probably better with WeWork than with Regis. I was told more than a few times that this was the future of office work.

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