Wednesday, April 25, 2018


I never paid much attention to it but I never quite got the WeWork business model.

WeWork began business by leasing office space and renting desks to New York’s creative set, with unusual work perks such as microbrews on tap and a “community manager” who programs events such as book clubs and Ping-Pong tournaments. It now has 234 locations across 22 countries, company documents show, with a portfolio of short-term co-working spaces, mainly leased from landlords on long-term rental agreements.

Lease flexibility, a major perk for potential WeWork tenants, also poses one of the company’s biggest risks. The company is subject to "mismatched terms" when it takes 10- or 20-year office leases from landlords and then offers companies month-to-month rental options, according to Fitch.

Now I think I get it - attract a bunch of money by marketing itself to investors as a some sort of new economy thing (hip millennial working spaces with Ping-Pong and beer!!!), and use that money to go long on a massive portfolio of commercial real estate leases. Then hope for the best!

Could work. Will work for some people, as is always the case when money is sloshing around.