The story that garnered the most attention in 2019 was the spectacular flameout of WeWork. It was supposed to be the year where WeWork culminated its rise with a
much-anticipated IPO. Instead, the IPO had to be scrapped, there have been wholesale executive changes, mass layoffs and the company’s future is now more uncertain then ever.
The company began 2019 with an estimated valuation of roughly $47 billion, which would have been the largest IPO ever. It took the number one spot on Colliers International’s list of top co-working operators in the 19 markets the brokerage tracks, with 154 sites totaling more than 12.2 million sq. ft. of space.
But when investors got to take a look under the hood as part of the IPO filing, a number of questions emerged. Wall Street analysts balked at the company’s proposed valuation after studying its preliminary SEC filing and seeing little to back up WeWork’s planned path to profitability (in addition to eyebrow-raising self-dealing by founder Adam Neumann).
Soon the IPO was delayed indefinitely, Neumann was ousted and its largest investor, SoftBank, had to bail out the company in a $9.5 billion deal.
It’s still unclear how much fallout there might be in the commercial real estate market at large—WeWork is planning to exit a portion of its leases, which may in turn lead to some landlords being stuck with vacant spaces and no lease guarantees, and to potential CMBS loan defaults.
But office sector insiders say that the co-working sector as a whole will continue to grow, even in the event of a market downturn—though it may see some consolidation. Traditional office landlords and even some hotel and multifamily operators seem to agree—they are starting to spin-off their own co-working concepts.