bisnow.com: Top CRE Execs Answer 3 Important Questions On The Future Of WeWork
Interview with Jason Richards, Partner, Stos Partners
Will the attitude of landlords and the office market toward WeWork change after everything we’ve learned?
Landlord reaction to the latest publicity and failed WeWork IPO is likely to result in increased hesitation towards concessions and reduced lessor contributions towards any new lease negotiations. WeWork has done its best to shift location-specific operational risk to the lessors where it can. As a result, there may not be much recourse for a landlord if a specific location fails. It’s also likely that WeWork’s profitability will now be under a microscope, which could impact subsequent lending or investment sales of properties heavily occupied by WeWork.
Is the IPO being shelved good or bad for the office market?
If the WeWork IPO is being shelved because of a lack of fundamental strength in the company’s business model, then it’s good for the office market. Many in the industry believe the long-term viability of the coworking business model on which WeWork is based still needs to be proven. If the WeWork model is, in fact, broken, it’s best for that to be out in the open so its risk can be appropriately assessed.
What will we be saying about WeWork at this time next year?
While we believe the WeWork model can work, it appears that it may need to go through this current reorganization to better align itself on a path to success. A year from now, we believe the consensus will be that it was good for WeWork to have undergone this shake-up, and that the company will then be on stronger footing. However, the firm’s aggressive growth strategy will likely have to wane in order to shore up its foundation.
Article source: bisnow.com