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WeWork rocked commercial real estate – like it or not – The Independent News

With free coffee, sofas and glass partitions, the startup workspace with WeWork has rocked office culture and commercial real estate.

Getting rid of questions about its business model, New York clothing showed no signs of slowing down and is now preparing for Wall Street's debut to raise new capital.

Recently this month WeWork sought to use the credit market of $ 4 billion to expand its footprint on the market to work together, according to The Wall Street Journal.

When French startup CybelAngel wanted to open an office in New York, WeWork was the obvious choice.

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With only basic furniture, their space currently faces Tony 5th Avenue Manhattan, with a corner office next to a small conference room.

"It's not cheaper" than traditional office rentals, said Jocelyne Attal, head of CybelAngel operations in New York.

"But we don't have to make a three-year commitment."

He added: "There is security, a reception desk, building codes are met, there is a housekeeping service. We don't have to take care of anything."

Free Monday breakfast and Thursday drinks also don't hurt.

When the company first appeared on the scene in 2010, the concept of cooperation only began to gain traction thanks to new technology that enabled professionals to work remotely.

And the global financial crisis actually helps businesses, because it encourages financial and creative professionals to launch their own startups.

"WeWork was the first truly interested in all requests from first-time entrepreneurs and small businesses," said Alex Cohen, vice president of the Kompas real estate company in New York.

In the WeWork room, all office supplies and utilities are provided, up to internet connections and printers. And the decoration, a combination of bright colors and industrial themes, appeals to millennials.

But the company has also attracted interest from large companies such as Microsoft, HSBC and Facebook.

Companies with more than 500 employees now represent 40 percent of WeWork clients.

Officially renamed the We Company in January, the company now manages 485 locations in 28 countries – often the entire floor is divided into separate offices, public spaces and individual workspaces equipped and leased by WeWork.

Office work in Singapore

Loss or Investment?

"Per square foot, this is far more expensive than an ordinary workplace," Cohen of Compass said.

But for small businesses, benefits per person increase.

"You sit in a room with four or five other people, and included in the desk space is the ability to use the conference room, to enjoy the lounge, the kitchen."

But not everyone welcomed the rise in the company.

"There is some reluctance among owners about renting space, given the fact that WeWork tenants are relatively short-term," he said.

In a recession, tenants will tend to clean up.

The real estate market actor remembers the mistake that occurred in a company called Regus – now an office space and a colleague known as the IWG – which almost went bankrupt after the fall of technology in 2001.

And the question continues about whether WeWork's business model is sustainable.

The latest estimate values ​​the company at $ 47 billion despite continuing to burn cash: $ 1.9 billion in losses last year with revenues of $ 1.8 billion.

IWG revenue almost doubled last year, and is also profitable and has a market capitalization of $ 4 billion.

Meanwhile, WeWork has ventured into new fields such as residential apartments and education, and told investors that they should see quarterly losses as investments.

"We really want to emphasize the difference between losing money and investing money," Chief Financial Officer Artie Minson told CNBC.

"At the end of this quarter, we have these cash flow generating assets."

Certain steps by co-founder Adam Neumann, such as investing privately in real estate before hiring him back to WeWork, also caused some people to grit their teeth.

However, Cohen said the co-working has pushed demand for commercial real estate in the main urban market over the past five years.

"Many landlords, despite a certain amount of reluctance, or reluctance among their lenders, must accept WeWork as a good opportunity for them," he said.

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