“They have been living in Never-Never Land,
an unsustainable paradise that is now going
to get ratcheted back,” said Allen Adamson,
an adjunct professor at New York University’s
Leonard N. Stern School of Business. “They
are not going to be able offer fewer cups of
coffee to close the gap. It’s too big a gap.
This is going to draconian in term of what has
to be done.”
WeWork says it intends to move away from
traditional lease agreements in favor of
partnerships, in which landlords shoulder
some renovation costs. The company is also
shifting its focus from freelancers and start-ups
to companies with more than 500 employees
that sign longer leases and provide more
stable revenue.
The trouble is WeWork faces growing
competition from rival flexible office space
providers pursuing those same strategies.
Some traditional real estate companies,
meanwhile, have launched their own flexible
office space offerings, trying to tap into a
market that WeWork helped jumpstart.
There are more than 700 companies that offer
flexible office leases in the U.S, according to
real estate service firm CBRE. WeWork, for now,
is a dominant player, accounting for 33% of
flexible office space supply.
Jonathan Wasserstrum, whose company
SquareFoot helps businesses find office
space, said WeWork tenants have called to ask
if they can get better rates in exchange for
sticking with the company. He said that might
be unlikely at a time when WeWork is trying to
cut costs.