WeWork was valued in 2019 at $47 billion. The company, which suffered a failure to go public under its intended 2019 IPO, welcomed public investments in October 2021 via a SPAC (Special Purpose Acquisition Company). The new 9 billion valuation highlights the company’s turbulent recent history.
WeWork is an office-leasing company. It makes money by renting office space to individuals, freelancers, and groups who want the benefits of a fully stocked office. WeWork purchases real estate space in an office building and transforms it into smaller offices. Additionally, the company offers value-added services such as; design, meeting spaces, stationery, coffee on tap. The business model works because the per-day cost of a short-term rental is higher than the per-day cost of a long-term rental.
As one would expect, any business dependent on physical contact and presence encountered difficulties associated with the COVID-19 pandemic. Many businesses were forced to shut down earlier in the pandemic due to stringent lockdown measures as employees increasingly work from home and the market suffered a decline in demand for longer rentals and leases at the corporate level. The company suffered falling revenues and exited 66 locations and renegotiated 150 lease arrangements relieving the entity of an estimated reduction of $1.5 billion in long-term liabilities (Reuters, Nov 2020). However, retention and renewal rates continue to improve and stabilise. China, a major market, has nearly bounced back from pre-pandemic levels from an occupancy perspective.
WeWork is not unique. The Belgian company IWG, which operates primarily under the name Regus and other smaller brands, utilises a similar business model of leasing, refurbishing, and sub-leasing office spaces to tenants desirous of short-term rentals. IWG has more square feet of office space than WeWork, earns more revenue and profit. IWG has a market cap of circa $3.7 billion, less than WeWork's revised valuation.
In 2015 Regus Caribbean opened its first office in Barbados. They have experienced steady growth allowing them to launch several other locations such as in Jamaica. The company opened in Guyana in late 2020 as it hopes to tap in on the growing demand for corporate office spaces locally.