Embattled WeWork Still a Go in ColumbusOctober 24, 2019 4:02 pm Susan Post
As of late, global coworking company WeWork has been making headlines for all the wrong reasons.
The startup’s meteoric rise is coming to a crashing halt as a bailout package from one of its largest investors – one that it needs to even layoff its employees – comes together.
The news comes as WeWork prepares to open its first location in Columbus at 800 N. High St. in the Short North. Brent Crawford, principal and founder of Crawford Hoying, the building’s developer, says the Columbus WeWork is still moving forward. And that WeWork is actually a better company today.
“Asking me today, I think we are in better position now than we were a year ago having them as a tenant in the building,” Crawford says.
But first, some context as to why the headline-making company might actually have a future.
Things for WeWork started to unravel when it submitted the paperwork for its Initial Public Offering (IPO) in August 2019. The filing gave a troubling look into the company’s finances, including year after year of losses ranging from the millions to billions of dollars. It also included a staggering $47 billion valuation.
A Business Insider article outlines the next of WeWork’s troubles, largely centered around CEO and Co-Founder Adam Neumann. By early September, a delayed IPO and downgraded valuation of $20 billion were on the table. By the end of September, the IPO was delayed indefinitely, the company’s valuation had dropped to around $10 million, Neumann had stepped down as CEO, and news also broke that WeWork was potentially halting all new lease agreements, calling into question the still-to-open Columbus location.
Then, on Monday, October 21, reports began surfacing of a bailout package from WeWork investor SoftBank. A Japanese conglomerate, SoftBank has already directly invested $7.5 billion in WeWork, according to Forbes.
The $9.5 billion bailout package will give SoftBank 80% ownership of WeWork, which is now valued at $8 billion with the deal – $39 billion less than just two months ago.
The bailout deal also ousts Neumann for the board, and gives him the chance to walk alway. Albeit with $1.7 billion.
Crawford says they’ve watched extremely closely as the saga has unfolded. He was never worried that WeWork was going to go under entirely. As one of the largest investors in the world, SoftBank has too much on the line – both in terms of reputation and money already invested – to let WeWork fail.
The new era of WeWork should see the company refocus on operations, and its key coworking product, instead of growth – which Crawford thinks is a good thing.
In a press release, new WeWork Co-CEOs Artie Minson and Sebastian Gunningham said, “We will have the flexibility to continue streamlining our assets and stabilizing the business without sacrificing our global brand and exceptional products. Narrowing our strategic focus to our core WeWork desk business will ensure we continue to provide our members with a great day at work, every day.”
WeWork is also selling three of the companies it acquired over the years and shuttering its education arm, WeGrow, as outlined by Business Insider.
As for Columbus, Crawford says WeWork is on track to be open by the end of the year and are working on their space daily.
While he’s not concerned about the longevity of WeWork with the recent investments and changes, should WeWork ever default on their lease, Crawford Hoying takes possession of the space – three floors and 46,000 square feet of space with high-end finishes that WeWork has built out on its own dime. Crawford is confident it could easily be re-leased.
WeWork is joined in the 800 N. High St. building by a 116-room Marriott Moxy Hotel that is slated to open next week. Cleveland-based Townhall will also open its restaurant on the ground floor come January, along with a new concept for the building’s rooftop patio.
For more information, visit wework.com.