Fall of a ‘trailblazer’: what WeWork’s bankruptcy means for flexible working

The Financial Times: The bankruptcy of WeWork, a pioneer in trendy flexible workspaces, reflects the broader challenges facing the office space sector due to shifts in working habits and the impact of technology. Despite renegotiating leases and reducing future rent obligations by $12 billion, WeWork couldn’t manage its over $13 billion lease commitments. The company’s failure is not seen as indicative of the entire flexible workspace industry, which is experiencing growth due to the increase in hybrid working arrangements post-Covid-19.

WeWork’s downfall is exacerbating the existing pressures on office landlords, with vacancy rates soaring and office values in major cities expected to halve. WeWork has requested to cancel numerous leases, which will affect the property values and raise concerns for landlords. However, the company’s influence on the overall market is relatively minor, and many of its locations are likely to be taken over by other operators.

Competitors are adapting with more sustainable business models, such as management agreements and joint ventures, avoiding the long-term leases that burdened WeWork. While some office landlords are considering offering their own flexible working spaces, the demand for flexible workspaces remains robust, with companies continuing to downsize from traditional office models to more flexible arrangements. Despite these changes, WeWork’s bankruptcy signifies a significant shift in the market, emphasizing the need for more adaptable and financially sustainable business practices in the flexible working sector.

The entire article can be read at the link https://www.ft.com/content/ee435941-4555-4476-afed-d10db2da9132