VC-Real Estate: WeWork Leasing Numbers Tanked After Failed IPO
A new CBRE report reveals that WeWork only signed four leases in the fourth quarter.
WeWork leasing numbers plunged in the wake of its failed IPO. A new report from CBRE reveals that the company saw a 93% decline in leasing activity in the fourth quarter. That period coincided with a massive bailout by SoftBank and the departure of WeWork’s founder.
According to CBRE data, WeWork only leased 184,022 square feet during the quarter. That is a massive decline from an average of 2.54 million square feet during the previous four quarters.
The decline in WeWork leasing activity created an opening for its competitors. It yielded its top spot in the work-sharing space to rival Spaces, which saw a 10.7% increase in leasing activity.
“Spaces, WeWork, Industrious and Knotel remained the largest lessees of new space in Q4, but all except Spaces leased significantly less space than their quarterly totals over the past year,” CBRE reported.
What WeWork Leasing Numbers Mean
Softbank took over WeWork in October after a $5 billion bailout package. Since September, the company has slashed 19% of its workforce, divested non-core assets, and jettisoned its founder Adam Neumann.
The former CEO resigned shortly after the firm filed its S-1, which earned remarkable criticism over its profitability projections and the state of corporate governance. Neumann walked away with an exit package valued at up to $1.7 billion.
The latest numbers raise concerns about the sustainability of WeWork’s business today and in the future. At the time of its S-1, it had eye-popping unfunded liabilities. The firm had signed significant long-term leases, yet serviced startups and small- to mid-sized businesses that averaged leases in the range of fewer than two years.
Hedge fund manager Bill Ackman has become a vocal critic of the company’s business model. In October, Ackman said that Softbank should have walked away from its investment.
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