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0 pointscylinder8y ago0 comments

Still incredibly overvalued -- they're just sublessors. They don't own their real estate.

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3 comments · 1 top-level

vlovich1238y ago· 2 in thread

Could be but they're middlemen providing a valuable service. It's a one-stop shop for a work environment. The landlord benefits because they have a regular income stream & don't need to worry about tenants coming & going. Customers get to adjust their needs on a month-to-month basis for a smaller up-front cost than they could get leasing themselves & can dynamically adjust if they grow. Similarly, they don't need to worry about setting up internet service & any of the other things WeWork offers. Additionally you can cheaply temporarily rent space if you have travel needs. That's the value-add. Now how successful they will be I don't know but I fail to see why real estate ownership matters here.

dasil0038y ago

Personally I think WeWork is pretty exposed to any kind of economic downturn as most of their customers are burning cheap VC money. If half those companies were serious about getting profitable they'd go somewhere else with half the amenities at a quarter of the price.

beagle38y ago

There aren’t places like this with short term leases. You either get expensive month-to-month (or slightly cheaper year to year) or you get a cheap 5-10 year lease.

If you are not established enough to take a 5 year lease, then wework (and their competitors, of which there are many) make a lot of financial sense, especially for the flexibility — e.g. if you downsize, rent goes down accordingly in 1 month. No “cheap” lease has this feature.

Also, WeWork is cheap compared to prices Regus used to charge 5 years ago; I would assume Regus did respond to the price pressure, but I haven’t checked.

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