We, along with thousands, are closely observing the growth of WeWork, especially when it comes to the sheer size of each location they are adding or expanding upon. So many will either feel threatened (Regus) or will see opportunity to compete. There will also continue to be fallout from an uptick in location saturation and not all coworking spaces will survive.
And, not unlike other observers close to the industry, we do not attribute WeWork’s model to the pure coworking form as it debuted earlier this decade.
It seems a no-brainer to want to see this as the next easy-money real estate play and get in yourself.
So what’s left to say?
A bit more.
We both appreciate WeWork increasing awareness and share some cautionary notes to those considering jumping into the now-increasing pool of new entrants:
1- we’re delighted that our consultancy is becoming an “overnight success” after 15 years based on the increased market awareness of coworking and the desire to open spaces that are financially sustainable (we share the “how it works”)
2-caution that, due to low barriers of entry, it seems easy to simply open a space, charge 3-4 times the rent being paid (or an equivalent of debt service) and believe it will magically succeed (there is a lot more to it)
3-the “secret sauce” of this model, similar to all hospitality businesses, is a combination of the negotiation of strong lease terms AND the team that is hired to manage the community
4-coworking or collaborative workspaces do NOT have to take down 40,000 SF+ spaces to be successful
5-it’s important to take advantage of the NO COST TO YOU services of a Real Estate Tenant Representative in finding your space, whether to lease or buy (see #3)
Lastly, consider hiring a professional team to support your efforts, including your attorney, accountant and of, course us, as in YES!, to allow you time to sort through the potential pitfalls even before getting this off the ground.
wendy February 10th, 2016