While WeWork's collapse may have been the result of a combination of factors and mounting pressure, other co-working companies now have the luxury of learning from their mistakes.
Director Tom Davey comments on the collapse of WeWork in Raconteur
In light of the collapse of office-space provider WeWork, Director Tom Davey comments on how changing workspace demands and tough market conditions led to one of the most valuable startups in the US filing for bankruptcy.
Tom’s comments were published in Raconteur, 9 November 2023, and can be found here.
“While the challenges faced by WeWork are not unique to the organisation, the departure of key executives and the company’s founder have only served to exacerbate the difficulties the office space provider currently finds itself in. These factors, combined with the falling share prices and rising debt costs, have also seen shareholder confidence knocked, making the position for those at the helm untenable.
“Responding to the increased demand for flexible workspaces, WeWork’s fresh and contemporary environment was a particularly attractive prospect to start-ups and SMEs. However, other companies soon caught up and started offering alternative office space, particularly to those in professional industries such as legal and finance, who wanted a more formal workspace.
“The covid lockdowns dealt another significant blow to the company, with the move to flexible working meaning that many businesses were able to quickly abandon short-term workspaces and move to effective home working. Post-pandemic, the return to in-person work has been slow and pressure has built with lower demand, more competition, and high debt costs which has only put further strain on WeWork and its competitors.
“While WeWork’s collapse may have been the result of a combination of factors and mounting pressure, other co-working companies now have the luxury of learning from their mistakes.
“Overall, we are seeing that demand for co-working and smaller office spaces has remained strong, with larger companies looking to downsize due to the less attractive long term leases on larger rentals. With the rising cost of living and increased rents across the UK, cost cutting is the order of the day in these uncertain times.
“WeWork’s ability to energise the flexible office workspace market caught the zeitgeist of a generation of small companies and proactively catered for business requirements.
“WeWork overreached and stretched its already strained budget and resources, and the impact of the pandemic and decrease in demand for such workspaces led to mounting debts. However, these are risks that have been faced by the office rental market across the board, so WeWork’s management must not be overlooked as a significant contributing factor in its collapse.”