WeWork Co-Working Reinvents Commercial Real Estate

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In a December 2000 Building Owners and Managers Assoc. (BOMA) talk, I predicted that future real estate promotion would include the line “Conveniently located near the super information highway.” No company has lived up to that vision better than WeWork.

The startup traces its roots to a partially vacant building in Dumbo, Brooklyn, where in 2008 Adam Neumann and Miguel McKelvey opened Green Desk. Ten years later, WeWork is valued at $20 billion, based in part on a $4.4 billion investment from SoftBank’s Vision Fund.

Its pioneering efforts have established co-working and co-living as viable alternatives to real estate’s most disliked pain point, the lease. Pain point analysis is one the best ways of creating customer-centric innovation.

Freeing tenants from leases, WeWork has been welcomed by entrepreneurs in 230 locations worldwide, including Peru, Ireland and Los Angeles, seen above. It has even opened a co-living space, naturally called WeLive, at 110 Wall Street in New York. But its impact reverberates well beyond freelancers and startups.

According to Emergent Research, freelancers and independent workers composed nearly 80% of co-workers seven years ago but that share has shrunk to 39% today.

More than 20% of WeWork’s business now comes from companies with more than 1,000 employees, which suggests that entities like WeWork will significantly disrupt the commercial real estate market.

Large companies, such as IBM and Verizon, have signed up for co-working space at its “Powered by We” offices at Dock 72 — a high-profile commercial property at the Brooklyn Navy Yard.

The number of enterprise companies leasing space from WeWork doubled in 2017. And the number of seats, or workers, enterprise companies employed at WeWork grew nearly fivefold, or 360%, the direct result of existing corporate clients taking up more real estate.

Re-inventive tenants are attracted to WeWork’s treasure trove of information collected over a 10-year history. This data lets WeWork tenants leverage technology to optimize office design and worker productivity, something that ordinary real estate companies can’t easily match.

WeWork growth curve, particularly in New York, is spectacular. It currently has 2.9 million square feet of open office space across Manhattan, Brooklyn and Queens, making it the second largest private office tenant behind banking giant JPMorgan Chase:

In 2017, WeWork’s top-line revenue reportedly surpassed $900 million. Its full-year run rate revenue is expected to reach $2.3 billion in 2018.

In October 2017, WeWork acquired the Lord & Taylor building in Midtown Manhattan for $850 million. The company plans to use that prestigious Fifth Avenue address for its East Coast headquarters.

According to the Global Coworking Unconference Conference, growth in the global number of co-working members will nearly triple from 1.74 million in 2017 to 5.1 million in 2022. WeWork has 200,000 members as of February 2018, or about 11% market share.

Wouldn’t these heady stats readily qualify WeWork for a membership in BOMA, readers?

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