Smart Cities

WeWork Sells Office Space, We Company Sells an Entrepreneurial Culture

WeWork sits on the ledge between being an overvalued real estate player, and being one of the key driving forces for an innovation-focused movement that is redefining the way companies and workers operate. However, recent deals may mark a turning point, allowing the firm to develop resilience while also supporting its primary vision. Critics say WeWork’s success and failure are too dependant on startup and gig economy development, but as long as those cultures continue to emerge WeWork is positioned to be at the heart of “work” in the future. That’s why an office real estate play can reach such a lofty valuation. “These new agile ways that occupiers are taking up space in the major cities around the world have given rise to the co-working phenomenon, which has been one of the biggest trends in real estate over the last couple of years,” explains our recent report StartUps and their Impact on Smart Buildings […]

Stay ahead of the pack

with the latest independent smart building research and thought leadership.

Have an account? Login

Subscribe Now for just $180 USD per year per user ( just $15 USD per month) for Access to Quality Independent Smart Building Analysis!

What Exactly Do you Get?

  • Read every article published in full and get unlimited access to our archive of over 1,400 articles.
  • 10% discount on ALL Memoori Research reports for Subscribers! So if you only buy ONE report you will get your subscription fee back!
  • Industry-leading Analysis Every Week, Direct to your Inbox.
  • AND Cancel at any time
Subscribe Now

WeWork sits on the ledge between being an overvalued real estate player, and being one of the key driving forces for an innovation-focused movement that is redefining the way companies and workers operate. However, recent deals may mark a turning point, allowing the firm to develop resilience while also supporting its primary vision.

Critics say WeWork’s success and failure are too dependant on startup and gig economy development, but as long as those cultures continue to emerge WeWork is positioned to be at the heart of “work” in the future. That’s why an office real estate play can reach such a lofty valuation.

“These new agile ways that occupiers are taking up space in the major cities around the world have given rise to the co-working phenomenon, which has been one of the biggest trends in real estate over the last couple of years,” explains our recent report StartUps and their Impact on Smart Buildings 2019. “The rise of more flexible co-working options for workers, initiated by startup companies such as WeWork, has created more competitive pressures for landlords of commercial buildings and established facilities management and real estate service firms.”

Global real estate consultancy JLL recently published their European Disruption or Distraction report, which explored the growth of flexible office space across the continent. According to their conclusions, the sector has more than doubled in size since 2014 and is set to grow by up to 30% per year over the next five years. JLL does not expect all growth in flexible office space to come from startups and freelancers, however, they predict that these dynamic workplaces will make up 30% of some corporate portfolios by 2030.

Forecasts like these have attracted huge investment in WeWork who has designed workspaces and brand identity around the casual style of a millennial generation that dominates the startup landscape and has begun to take a more influential role in the corporate world. Softbank Vision Fund’s bold $4.4 billion investment in August 2017 has now grown to a reported $10 billion investment despite Softbank’s anchor investors, Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Co., pushing-back due to their own real estate ambitions.

WeWork has not rested on its laurels, however. The real-estate unicorn has made 12 acquisitions in recent years to spread risk and broaden its potential. WeLive was a small step into residential real estate, offering flexible living spaces to a similar demographic as its WeWork occupants. WeGrow is a elementary school, in the Chelsea neighborhood of Manhattan, with a focus on entreprenuership. While the acquisition of the Flatiron coding School and education platform also served to ride the wave of startups and freelancers that have come to define the parent company, recently rebranded as ‘We Company’. As such, they have largely failed to reduce the perceived risk of their investment.

The We Company’s last two purchases, however, may have broken the mold in just the right way to convince the market of their longevity. Six months ago, WeWork paid $100 million for Salt Lake City-based office management startup Teem, then last week the firm announced the acquisition of San Francisco-based spatial-analytics provider Euclid. Both acquisiitons have clear advantages for WeWork’s office real estate and other operations, but they also open up new markets in the rest of the commercial real estate sector. A direction the We Company has dubbed “Workplace Insights.”

Teem has developed a strong technology bundle to manage a variety of office functions, such as conference room booking. While Euclid has built a proprietary analytic offering that uses WiFi signals to understand how space is used without the installation of any additional hardware. Teem and Euclid will become completely integrated within WeWork to focus on accelerating the development of a workplace insights solution.

“Our goal is to help enterprises create the most efficient, effective, and engaged workplaces for their employees,” said Shiva Rajaraman, WeWork’s chief product officer. “We will be able to provide enterprises with holistic insights around how their workplaces are used - ultimately, helping them to make more informed decisions to support their growth and company culture.”

“We’re moving toward a Google analytics for space and making sure rooms are used the right way,” continues Rajaraman, citing event planning as one example. “A lot of companies do happy hours on Thursdays, but they might learn that more people show up to an afternoon tea time or other type of session that changes participation. Companies can run tests in their own space.”

This Software-as-a-Service (SaaS) play has huge implications for the attractiveness of WeWork’s own office space. However, and more significantly, it allows them to build on their reputation as a provider of health-creativity-productivity enhancing workplaces to sell that kind of office experience to the rest of the commercial real estate market. This looks a lot like the first steps towards a broad portfolio of ‘We’ products and services targetted at the commercial real estate sector itself. We shouldn’t be surprised to see more acquisitions along those lines in the coming year alongside further funding from Softbank.

Most Popular Articles

Energy

Net Zero Buildings Explored: Powerhouse Brattørkaia

When the world’s northernmost net zero building uses solar power to generate twice as much energy as it consumes, then the green building movement seems more possible. The Powerhouse Brattørkaia in the fjord-side city of Trondheim, Norway, utilizes energy generation, storage, efficiency, and embodied carbon approaches to reach energy-positive status and even supplies clean power […]

Subscribe to the Newsletter & get all our Articles & Research Delivered Straight to your Inbox.

Please enter a valid email

Please enter your name

Please enter company name

By signing up you agree to our privacy policy