The attraction to flexible office space is that businesses can more easily adjust to trends like the hybrid office, in which people go into the office less often and for different reasons than they used to. Industrious says it thinks it will max out on fitting new customers into its existing space next year. They’ve retained enough business to keep them afloat during the pandemic and are looking forward to a time when their flexible space is more attractive than regular long-term office leases. WeWork and its competitors like Knotel and Industrious - all of which lease ready-to-use office space to individuals and companies - have slowed their rapid growth but haven’t had to downsize much. The amount of leased flexible office space in the top 23 US markets was 67.1 million square feet at the end of the third quarter this year, according to the commercial real estate services giant Cushman & Wakefield, up 2.5 percent from where it was at the end of 2019. In Manhattan, the biggest office market, just 10 percent of office workers have come back, and some may never do so.īut while new leases are down, few are relinquishing flexible office space. Only a small portion of people have returned to the office. There’s no getting around the fact that the pandemic has been rough on owners and operators of office space, including flexible space, which people can get rid of more easily. So to comprehend WeWork’s remarkable recovery, you need to know more about flexible office space and its prospects. “It will come out of this stronger than it went in.” “We believe, based on our data and history, that flex is going to be a very viable alternative when interest in office space rebounds,” Julie Whelan, global head of occupier research at the commercial real estate firm CBRE, said in a recent briefing about flexible office space. Meanwhile, flexible space’s value proposition is looking more attractive for companies trying to contend with the uncertainty of a more dispersed workforce spending more of their days at home. With the arrival of a vaccine, those issues are seeming less important. Indeed, so-called flexible office space has proved surprisingly hardy during the pandemic, given that its business had been predicated, in part, on the idea of squeezing as many people into as little square footage as possible. But the company’s perseverance is also a testament to the strength of the flexible office market, a real estate sector that focuses on short leases and move-in-ready space, in addition to coworking.
WeWork’s upheaval meant that the company was already forced to be agile in order to avoid destruction before the pandemic. A new CEO, Sandeep Mathrani, took over this February and was charged with righting the company’s mission, cutting costs, and excising a destructive company culture in order to bring the once highly valued unicorn back from the brink. As he sought a tech company valuation for the office subleasing company, Neumann’s hard partying, profligate spending, and poor judgment derailed that goal and nearly destroyed the company. Last year, the company ditched its founder, Adam Neumann, who had created a company culture that was more in line with the most outrageous tech company than something as quotidian as real estate. Some of the most important changes, however, happened before the coronavirus took hold. Miraculously, one year and one pandemic later, the coworking company is not only still kicking, but it stands to ride post-Covid-19 office trends to profitability and an IPO - if it can hold on long enough.Ī company that rents out trendy shared and private office space, WeWork has made a number of critical changes that have helped it hold on while facing a pandemic that kept people home and away from offices.
Last year, WeWork failed to become a public company after a high-profile implosion full of intrigue, excess, and downright foolishness.