WeWork fortunes are slowly turning sour on dominating the co-working space for close to nine years. The company is under immense pressure after struggling to generate a profit nine years down the line and canceling a much-awaited Initial Public Offering. After raising more than $12 billion since inception, the company is also at risk of running out of cash.
WeWork Dwindling Edge
The company rose to dominance by deploying tactics that, in most cases, took the industry by storm. The company succeeded in shrugging off competition by poaching customers with promises of free rent and offering rich broker commissions.
Fast forward, the tactics have finally caught up with the company as the likes of IWG PLC, Convene, and Knotted continue to ramp up the pressure.
WeWork is now at risk of losing some valuable customers a number of its property owners having already turned their attention to its competitors. Reports indicate that as many as three large property owners in the U.S are on the cusp of partnering Novel Coworking as they seek to sever ties with the company. The landlords have reached out to the providers with a view of letting them manage their office spaces.
This is in contrast to the days when WeWork employees yielded too much power in swaying property owners to lease their office space to them. At its peak, WeWork added more than 1 million square feet of property a month by using incentives to entice landlords and other property owners.
IPO cancellations Impact
Since the office sharing company canceled its IPO resulting in its CEO stepping down, its sentiments in the market and the industry have turned sour. The cancellation also means the company will miss out on much-needed capital that would have gone a long way in fuelling the core business.
While the company was one of the fastest-growing co-working space providers just a few weeks ago, the same is no longer the case. Uncertainties continue to grip the company amidst growing concerns that it could run out of cash as soon as the next spring.
The uncertainties have emerged as the biggest threat to the company’s core business as property owners, investors and tenants remain on edge. Reports indicate the company is struggling to ink deals for two large London office buildings. The company has also had to end negotiations on a Dublin office block.
While admitting the company faces a string of challenges, CEOs Sebastian Gunningham and Artie Minson have sought to reassure investors and clients that current woes will pass sooner than later.