The Property Industry Is Falling Out of Love with WeWork • Hacker News Board

Re: The Property Industry Is Falling Out of Love with WeWork

#31

Post by hbosch » Thu, Dec 20, 2018, 1:49 AM UTC

jelling wrote: post #25

"Brokerage CBRE Group Inc. in October launched a business called Hana that will help landlords create their own flexible offices. Owners want to be a part of the rising demand for that type of space, said Andrew Kupiec, Hana’s CEO." Good luck trying to create a nice product with a federation of people with zero product experience. You'll be training them / fighting the same battles over and over. And just wait until…

What’s WeWork’s “product” again? Exposed brick and free beer? Seems like the only roadblock to successful emulation here is money and property — both of which CBRE has. You can hire someone for the interior design. They already split off a new brand with a fun, easy name.

Re: The Property Industry Is Falling Out of Love with WeWork

#32

Post by hinkley » Thu, Dec 20, 2018, 1:50 AM UTC

reaperducer wrote: post #6

dylan604 wrote: post #3

I was using space at a WeWork like company. This company was leasing office space from a building managed by CBRE. If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does. I do not know how long this particular shared office was there, but it recently closed back in October because of friction with CBRE. I don't think the shared office space concep…

If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does CBRE Launches New Coworking Brand, Hana: https://allwork.space/2018/11/cbre-launches-new-coworking-br...

These two things need not be mutually exclusive.

There’s always competition between divisions at large companies.

Also these guys might not have gotten the memo yet, or they did get the memo and there was friction about someone using CBRE property to “compete” with a business unit that wasn’t public knowledge yet.

Re: The Property Industry Is Falling Out of Love with WeWork

#33

Post by grigjd3 » Thu, Dec 20, 2018, 2:10 AM UTC

hbosch wrote: post #31

jelling wrote: post #25

"Brokerage CBRE Group Inc. in October launched a business called Hana that will help landlords create their own flexible offices. Owners want to be a part of the rising demand for that type of space, said Andrew Kupiec, Hana’s CEO." Good luck trying to create a nice product with a federation of people with zero product experience. You'll be training them / fighting the same battles over and over. And just wait until…

What’s WeWork’s “product” again? Exposed brick and free beer? Seems like the only roadblock to successful emulation here is money and property — both of which CBRE has. You can hire someone for the interior design. They already split off a new brand with a fun, easy name.

WeWork's product is handling landlord and broker negotiations for you. They are giving more power to the tenant as WeWork is large enough that they often carry significantly more leverage into a negotiation.

Re: The Property Industry Is Falling Out of Love with WeWork

#34

Post by eropple » Thu, Dec 20, 2018, 2:23 AM UTC

grigjd3 wrote: post #33

hbosch wrote: post #31

Earlier quoted context omitted.

What’s WeWork’s “product” again? Exposed brick and free beer? Seems like the only roadblock to successful emulation here is money and property — both of which CBRE has. You can hire someone for the interior design. They already split off a new brand with a fun, easy name.

WeWork's product is handling landlord and broker negotiations for you. They are giving more power to the tenant as WeWork is large enough that they often carry significantly more leverage into a negotiation.

WeWork has leverage that they convert into a lot of arbitrage. I'm not so convinced of the value there.

Re: The Property Industry Is Falling Out of Love with WeWork

#35

Post by pimlottc » Thu, Dec 20, 2018, 2:25 AM UTC

> WeWork forms a subsidiary to represent each lease deal, which means individual locations could fold without leaving the company itself with much risk. The parent company only guarantees the lease for about six to 12 months on a 15-year agreement, according to documents associated with WeWork’s inaugural bond offering.

So, they sign a 15-year lease but are only on the hook for the first year? How does that work? Sounds more like a year lease with an option to extend?

Re: The Property Industry Is Falling Out of Love with WeWork

#36

Post by crazygringo » Thu, Dec 20, 2018, 2:29 AM UTC

pimlottc wrote: post #35

> WeWork forms a subsidiary to represent each lease deal, which means individual locations could fold without leaving the company itself with much risk. The parent company only guarantees the lease for about six to 12 months on a 15-year agreement, according to documents associated with WeWork’s inaugural bond offering. So, they sign a 15-year lease but are only on the hook for the first year? How does that work? Sou…

The subsidiary signs the 15-year lease, not WeWork.

So basically if the location turns out to be unprofitable, the subsidiary goes out of business or goes bankrupt and WeWork isn't stuck with the lease.

From the landlord's perspective, yes it is basically equivalent to a year lease with option to extend... not totally clear why the landlord would agree to that.

Re: The Property Industry Is Falling Out of Love with WeWork

#37

Post by Animats » Thu, Dec 20, 2018, 2:31 AM UTC

Uh oh, another overpriced company funded by Softbank. Softbank, remember, is funded by Saudi Arabia's sovereign wealth fund. They're also behind Uber. They seem to be the world's largest source of dumb money.

I wonder what the big customer lease deals with WeWork look like. They probably don't get the markup they do with little tenants.

Re: The Property Industry Is Falling Out of Love with WeWork

#38

Post by Analemma_ » Thu, Dec 20, 2018, 2:33 AM UTC

eropple wrote: post #34

grigjd3 wrote: post #33

Earlier quoted context omitted.

WeWork's product is handling landlord and broker negotiations for you. They are giving more power to the tenant as WeWork is large enough that they often carry significantly more leverage into a negotiation.

WeWork has leverage that they convert into a lot of arbitrage. I'm not so convinced of the value there.

Businesses love to throw money at a problem so it Just Works and they don’t have to think about it. This shouldn’t be surprising: a large percentage of the enterprise software industry, including most cloud computing, runs on this tendency. WeWork is just extending this idea into the realm of physical office space.

Re: The Property Industry Is Falling Out of Love with WeWork

#39

Post by donedeals » Thu, Dec 20, 2018, 2:38 AM UTC

pimlottc wrote: post #35

> WeWork forms a subsidiary to represent each lease deal, which means individual locations could fold without leaving the company itself with much risk. The parent company only guarantees the lease for about six to 12 months on a 15-year agreement, according to documents associated with WeWork’s inaugural bond offering. So, they sign a 15-year lease but are only on the hook for the first year? How does that work? Sou…

Wework Brooklyn #22 LLC signs the lease with the landlord and thus is responsible for the lease obligations. Wework LLC (proper) guarantees these lease payments for only 6- 12 months of the lease. After this time the only party responsible for the lease is the LLC that was formed.

Landlords are likely agreeing to this only because Wework would never be able to sign a lease with any owner if they defaulted on a location.

Re: The Property Industry Is Falling Out of Love with WeWork

#40

Post by code4tee » Thu, Dec 20, 2018, 2:40 AM UTC

At the end of the day WeWork is essentially a middle man. If the model catches on landlords can make WeWork irrelevant by just adapting and offering “WeWork” style coworking space thus it’s not clear what the end game of all this is. If it fails it fails. If it succeeds it’s super easy to copy and cut them out of the equation.

WeWork as a company is also becoming increasingly unfocused. They’re getting into everything from schools, daycare and all sorts of other stuff. That’s never a good sign. Do one thing and do it really well profitably. Anyone can do a lot of cool stuff while burning investor cash like crazy.