Company WeWork has officially pulled their IPO offering – Now Commercial Real Estate Experts Weigh-in on the Future of WeWork as they prepare to lay off thousands of employees.
The parent company of WeWork, The We Company, will file to withdraw its public offering with the Securities and Exchange Commission, the company announced on Monday.
Lots of questions about the future of the IPO when the company moved to delay an investor roadshow. Shortly after, then CEO Adam Neumann, resigned as the company’s leader.
With the latest moves, the future of WeWork continues to grow.
With over 31 years of real estate experience, Chief Executive Officer George Pino of Commercial Brokers International says the company is just months away from closing their doors for good.
“WeWork as a company and a brand is currently in a position that will define its existence in the next few months. One of the main attractions of WeWork to the investment community has been their tremendous growth. With their recent plan to cease new lease signings this will heavily impact their unprecedented growth,” says Pino.
Pino believes for WeWork to continue as a brand they will need to address the profitability of the company. Compared to other larger suite companies such as Regus, their revenues are lower and they have yet to show profitability. This is one of the reasons why the IPO stalled and valuations of the company have tremendously fallen.
Historically, businesses have two options to increase profitability: Increase income and revenue while maintaining expenses, or cutting expenses. As reported by multiple news outlets, WeWork will stop all new lease agreements with property owners as the company looks to cut costs.
One of their options in cutting expenses is laying off employees, which they are currently planning to do. This will affect several WeWork locations in the Los Angeles area, many of whom directly work with property owners and landlords. This begs the question of how it may impact their customer service and what their members have come to expect. With so many changes, WeWork spaces may end up looking like any other Coworking/Executive Suite company, and how will that appeal to investors?
WATCH what the proposed IPO meant for Landlords and Tenants:
