Learning: don't try to go completely vertical because it increases the number of people who are threatened by you.
The Property Industry Is Falling Out of Love with WeWork
11–20 of 118 posts
Re: The Property Industry Is Falling Out of Love with WeWork
#12Unicorn playbook: 1. Jump on hot tech trend threatening to disrupt industry 2. pay way too much for customers 3. get lots of VC money and use VC money to pay way too much for more customers 4. grow gargantuan 5. transform into basically every other non-tech big player in the industry because zero marginal cost only works in few industries
You forgot the part about disregarding laws/regulations and trying to grow fast enough so that by the time the regulators start to apply pressure you have enough money and clout to fight back, all while preventing the smaller guys from doing the same thing you did. Not saying that WeWork is doing that, but it's definitely a time-honored Silicon Valley approach. Just look at the recent faux pas from Robinhood with the…
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Re: The Property Industry Is Falling Out of Love with WeWork
#13I was talking to a friend the other day who told me about multiple recent grads from their PhD program joining tech companies that were willing to pay for a shared work space office for remote employees. One said it was significantly cheaper to expand their team with remote employees and offer to pay for WeWork spaces than to expand the physical office space they already had (new hires got to choose what they wanted to do).
Re: The Property Industry Is Falling Out of Love with WeWork
#14I 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…
Why would a building owner disagree so staunchly with a leasee subletting to smaller offices? Can you fill me in on their motivation?
There are things they consider difficult. The building is responsible for all tenants in the building. Things like key card access to the building after hours, key card access to the parking structure, etc are all handled by the building. If the shared office space tenant is constantly asking management to revoke keys, issue new keys, etc, that becomes a pain point for them. In my experience, it was the key card access that was a huge problem. Also, each new tenant usually is expected to fill out some sort of credit/background check, and those cost money. Shared office space companies can have very high turn over, so each new sub-tenant would have to go through that process as well. The building management is going to want their company they trust to do it rather than having the shared space company handle it on their end. Sure, they can request the fees be re-reimbursed, but they still have to spend time/effort on it.
So imagine all of the things you have to do for a new lease. Multiply that by the numbers in a shared office space. People like doing the least amount possible. CBRE managed buildings prefer to have long term leases, so they only have to do this at the beginning of a lease, not constantly.
Re: The Property Industry Is Falling Out of Love with WeWork
#15The existing commercial office space system seems very inefficient for small to medium-sized companies. You lease space, spend a ton renovating it to look "on-brand," then move a couple of years later. The next tenant renovates the space again to match their brand. Each remodel comes out of a "tenant improvement budget" given by the landlord, but that has to be recouped in rent over the duration of the lease, so it's…
> spend a ton renovating it to look "on-brand,"
Wait, why? If you're a small-medium sized company that isn't in retail (or some other business where you, as a matter of course, service customers on premises) why would you divert a significant amount of money to renovations that match your brand?
If you need to meet with investors or potential employees and are that concerned about appearances then just do it offsite.
Re: The Property Industry Is Falling Out of Love with WeWork
#16Earlier quoted context omitted.
Why would a building owner disagree so staunchly with a leasee subletting to smaller offices? Can you fill me in on their motivation?
There are things they consider difficult. The building is responsible for all tenants in the building. Things like key card access to the building after hours, key card access to the parking structure, etc are all handled by the building. If the shared office space tenant is constantly asking management to revoke keys, issue new keys, etc, that becomes a pain point for them. In my experience, it was the key card acce…
Assuming the sub-leasor wasn't trying being dishonest, they should remain the primary responsible party to the leasor. I work for a company and have never met the person owning the building, but if I wrecked the hallway the owner would quite correctly go and talk with my employer.
The only way I see this becoming an issue is if WeWork was being shifty about taking responsibility for damage and risk caused by their clients and if they were it wasn't so much "market disruption" as "we don't want to play by the rules but still want cake"
Re: The Property Industry Is Falling Out of Love with WeWork
#17Unicorn playbook: 1. Jump on hot tech trend threatening to disrupt industry 2. pay way too much for customers 3. get lots of VC money and use VC money to pay way too much for more customers 4. grow gargantuan 5. transform into basically every other non-tech big player in the industry because zero marginal cost only works in few industries
You forgot the part about disregarding laws/regulations and trying to grow fast enough so that by the time the regulators start to apply pressure you have enough money and clout to fight back, all while preventing the smaller guys from doing the same thing you did. Not saying that WeWork is doing that, but it's definitely a time-honored Silicon Valley approach. Just look at the recent faux pas from Robinhood with the…
In some ways they are. The WeLive brand takes liberties with zoning laws that are in place to prevent SROs, for example. I wouldn't call it disregarding laws/regulations but they are potentially violating the spirit of those restrictions. It's not unique to WeLive - all of the co-living companies are doing similar things.
Re: The Property Industry Is Falling Out of Love with WeWork
#18Earlier quoted context omitted.
You forgot the part about disregarding laws/regulations and trying to grow fast enough so that by the time the regulators start to apply pressure you have enough money and clout to fight back, all while preventing the smaller guys from doing the same thing you did. Not saying that WeWork is doing that, but it's definitely a time-honored Silicon Valley approach. Just look at the recent faux pas from Robinhood with the…
Amazon was not unprofitable. They just constantly reinvested their profits back into their company instead of hording cash.
This misconception, or common statement, will never go away. You'll have occasion to post this sentence forever.
Re: The Property Industry Is Falling Out of Love with WeWork
#19The existing commercial office space system seems very inefficient for small to medium-sized companies. You lease space, spend a ton renovating it to look "on-brand," then move a couple of years later. The next tenant renovates the space again to match their brand. Each remodel comes out of a "tenant improvement budget" given by the landlord, but that has to be recouped in rent over the duration of the lease, so it's…
> spend a ton renovating it to look "on-brand," Wait, why? If you're a small-medium sized company that isn't in retail (or some other business where you, as a matter of course, service customers on premises) why would you divert a significant amount of money to renovations that match your brand? If you need to meet with investors or potential employees and are that concerned about appearances then just do it offsite.
Every small company I've every worked for has renovated their new space.
Often, when the old tenants leave, the space is beat-up and unpresentable. Relative to the aggregate cost of rent over a couple of years, spending $10-20K to buff it out, put some walls in for meeting rooms and offices, etc... isn't a problematic spend.
Re: The Property Industry Is Falling Out of Love with WeWork
#20The existing commercial office space system seems very inefficient for small to medium-sized companies. You lease space, spend a ton renovating it to look "on-brand," then move a couple of years later. The next tenant renovates the space again to match their brand. Each remodel comes out of a "tenant improvement budget" given by the landlord, but that has to be recouped in rent over the duration of the lease, so it's…
> spend a ton renovating it to look "on-brand," Wait, why? If you're a small-medium sized company that isn't in retail (or some other business where you, as a matter of course, service customers on premises) why would you divert a significant amount of money to renovations that match your brand? If you need to meet with investors or potential employees and are that concerned about appearances then just do it offsite.
Yeah I would argue this is actually something that drives up WeWork's costs. If you're a smallish business, you'll typically find an office that's already got an acceptable look and leave it alone. But WeWork always renovates their space to a high standard, which is very expensive.