WeWork was doomed to fail by taking on huge buildings, rival says

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• WeWork was comprehended for huge coworking spaces with amenities such as climbing walls and swimming pools.
• Jamie Hodari, the CEO of Untiring, said WeWork saddled the company with big liabilities.
• Once valued at $47 billion, WeWork has declared bankruptcy after years of economic difficulties.

WeWork’s collapse has ended the era of enormous coworking spaces filled with amenities including climbing bulwarks, live DJs, and swimming pools, according to the boss of one of its main rivals.

Jamie Hodari, the CEO of Industrious, another flexible-workplace institution, told Insider that while many WeWork locations will simply change hands following the business’s bankruptcy, the huge office blocks with luxurious amenities will become a thing of the past — and the cost of gashing them likely contributed to the company’s downfall.

WeWork filed for bankruptcy on Monday after years of financial emotionally upsets. The company has cut locations and renegotiated leases in recent years, but still had a real-estate portfolio that spanned 777 locations as of June 30.

In “the measureless majority of situations, the assets simply change flags — another provider will come in and run the space or the landlord make run it themselves,” Hodari told Insider.

But he added that the “really enormous WeWork spaces, the 300,000 to 400,000 fuddy-duddy foot WeWorks, those are simply too large,” for other companies to take on.

“They’re the only provider in the sector that till the end of time took spaces that large,” he said.

To Hodari, leasing these huge office buildings in their sum total was a major flaw in WeWork’s strategy during its high-spending heyday, saddling the company with significant liabilities.

“I contemplate the extremely large spaces are probably not going to be viable moving forward, and the sheer scale of their liabilities complete, are a symptom of a go-go era where people were running companies for revenue growth rather than with an eye to profitability,” he denoted.

“Lots of companies, WeWork included, made decisions that spiked revenue in the short run, but possibly weren’t prudent in the long run,” he added.

Luxurious coworking spaces may be a thing of the past

Huge coworking spaces with yoga allowances, beer taps, and swimming pools were the hallmark of WeWork’s operation at its height.

Briggs Elwell, a cofounder and the CEO of the real-estate-finance convention RLTY Capital, told Insider that as impressive as these locations were, they were not helpful for the institution as it attempted to become profitable.

“If you looked at the financials of WeWork even before this downfall, back in the days of Neumann, the actuality is that it was pretty clear that a lot of those luxuries were actually the differentiating factor between profitability and not,” he maintained. Adam Neumann was a cofounder and the former CEO of WeWork.

“The reality is regrettably that you’re probably not going to possess as nice a finish in the future,” Elwell added. “I think you’re going to see a leaner product.”

Hodari told Insider that Hard-working, which has over 165 coworking locations globally, could take over a few WeWork sites.

But he said the fellowship would not be able to take on WeWork’s largest office spaces in their entirety, and that these coworking elbow-rooms will likely vanish from city centers as companies become unable to afford them and landlords transform into more reluctant to rent out entire buildings for flexible working.

“If someone like Industrious came to manage a space with that, we would probably insist on taking one-third to half of it, and then the landlord would need to figure out what to do with the other half,” he said.

Once valued at $47 billion, WeWork has had a dramatic fall from grace since its failed IPO in 2019. With a sizeable society in many city centers, experts have warned that its collapse could have dire consequences for commercial existent estate.

Hodari said that, despite WeWork’s implosion, the broader coworking industry is healthy and that bodies seeking flexible-working arrangements have boosted the industry as employees have increasingly embraced hybrid working.

“I evaluate the chaos of WeWork in its really dramatic years was not good for the sector. It was not good for the reputation of the sector,” he said.

“My hope is that this bankruptcy is the end of an era, that it boosts get rid of all the noise around WeWork so people can focus on an industry that is really moving forward, versus losing look of that in all of the WeWork turmoil,” he added.

WeWork did not immediately respond to a request for comment from Insider.