Not that we didn;t know this was going to happen at WeWork:
So, what is going to happen here? The secret is this “Further Streamline Real Estate Footprint” Or, as we’ve said before, this is where the landlords get the shaft at WeWork: “WeWork (NYSE: WE) stock is down another 50% over night on news that they’re about to file for Chapter 11 bankruptcy. We can imagine all sorts of speculative flurries in WE stock as a result – the ability of the memesters and hoddlers to play with such stories is near inexhaustible. However we’d also very strongly suggest that there’s going to be no recovery for the equity here. The landlords aren’t going to allow that. And this is about the landlords too. The idea here is to shaft those landlords – to be able to break the leases. And the thing is, weirdly, that commercial office space has such vast problems right now that the reborn WeWork could even work.”
It really could work too – if they can renegotiate those leases down far enough.
Co working spaces don’t need a huge company on the NASDAQ to run them. It’s not a business that benefits much with scale. And it only really works if it’s about using up spare capacity. Company rents an office, only uses half of it, so put the rest out to coworking. Otherwise you’re competing with local bars, cafes, pubs who are more than happy to have people in between 9-5 on a weekday when they’re empty.
The Grift Continues.
They just got mugged by bad timing and reality didn’t they? 5 years ago probably looked really good, but everyone is so used to seeing people reasonably well dressed but in their home environment that I don’t think anyone gives a shit anymore. As long as the missus is dressed
Anyway, as Western Bloke says, this is something that could always been served by small businesses. I worked with a consultant about 7-8 years ago that rented one of these things in the city so he had conference rooms etc. The entire building, let’s say 10 storeys but small, was devoted to it. I never asked, but I think that was a private business running the building. If I had to guess, they’re broke now, all their tenants will be meeting on Teams.
@ LTW – no, the business “model” of WeWork didn’t make a lick of sense 5 years ago either. Leasing large commercial buildings at high, fixed rents and then renting them out piece-meal by the hour? Even a business naif like me couls see the – issues – with that idea.
WeWork was a gigantic bubble of confusion and misdirection, raised to insane FOMO heights by the unique personality of a single individual, who took the money and ran long-since. It was headed for collapse the day it was set in motion, the only question was the exact trajectory. A classic ” . . . . and then we make vast profits!” scheme, the only surprise is how many smart people fell for it, and for how long.
llater,
llamas
llamas,
I must admit I never paid a lot of attention to WeWork’s business model. Leasing large spaces and renting out by the hour? Wow. OK it was always doomed. The consultant I was talking about was at least booking space and access by the month or something.
I’ll stand by things have changed and the need to have that office space is a lot less than it used to be. When I’m on site, well, I have to be there. For most meetings now, off-site is fine unless the boss really wants me there. But then I was doing that long before Covid.
I think Llamas’ description of it being FOMO and the rest is spot on. There’s quite a good series on it and you really have to wonder how some apparently sensible people got hooked, but then again not when you consider all the other financial scandals.
https://www.youtube.com/watch?v=JYLxRdLDylc
(Also available as podcast)
At best you could see a franchise business making sense 10 to 15 years ago but it really was about local services for local businesses, now it makes no sense at all.
A classic ” . . . . and then we make vast profits!” scheme, the only surprise is how many smart people fell for it, and for how long.
Probably a big overlap with the “smart people” that ‘invested’ with Bankman-Fraud.
Well, the ‘by the hour’ comment was a bit hyperbolic, but you get the gist.
BiND, thanks for the podcast link, I will watch. In return, the really-rather-good YouTube channel called Coldfusion has an excellent 2-parter which (also) explains the bizarre alternate-reality slow-motion train-wreck that is (was) WeWork.
llater,
llamas