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How does it factor in that they are leasing their buildings? Won't their rents eventually go up, and won't they have to remodel all the time to keep up their hi

by taude 8y ago

How does it factor in that they are leasing their buildings? Won't their rents eventually go up, and won't they have to remodel all the time to keep up their hip/modern work spaces? It seems like funky math that I'm not understanding. Also, when a recession hits, it seems like the first offices a company closes has are the ones on a short-term lease at a co-working space.... [Edit] My second comment is because I work for a large company who opened an office in a WeWork space to be more hip and relevant....and I see a lot of other "big" companies with offices in the building.

runako 8y ago
Definitely not a WeWork booster, but I think I can see the other side of these questions. > How does it factor in that they are leasing their buildings? Won't their rents eventually go up, and won't they have to remodel all the time to keep up their hip/modern work spaces? All of this does matter, but per the OP may matter less than CAC + initial push into a market (brand-building etc.). Think of the cost to develop e.g. MS Word vs. the incremental cost to retain users (programmer salaries go up over time, they have to remodel the app ~annually, etc). If the WeWork model works in a market, they can buy buildings later (perhaps during a recession). > when a recession hits, it seems like the first offices a company closes has are the ones on a short-term lease at a co-working space I'm sure the other side of this argument goes something like the arguments against car ownership. Many companies won't have any long-term leases anywhere, will be more remote-friendly, etc. In fact some companies will choose to not re-up on long-term leases in favor of more flexible options like WeWork specifically because who wants to sign a long-term lease during a recession when visibility is poor?
- taude 8y ago
  Good points. I do think car ownership might be different because it's a depreciating asset with a limited lifetime of use. I think real estate and buildings, that lifetime can be significantly longer... It'll be interesting to see how this all works out for a lot of this generation "tech" companies.
koboll 8y ago
>Also, when a recession hits, it seems like the first offices a company closes has are the ones on a short-term lease at a co-working space.... Apartment rents spiked during the last financial crisis because people downsizing increased demand for them. It's entirely possible that downsizing companies might want to retreat from leases to smaller WeWork offices during the next one.
- sk5t 8y ago
  Aren't commercial leases typically of much longer terms than residential leases and less convertible than homeownership?

by taude 8y ago

runako 8y ago

Definitely not a WeWork booster, but I think I can see the other side of these questions. > How does it factor in that they are leasing their buildings? Won't their rents eventually go up, and won't they have to remodel all the time to keep up their hip/modern work spaces? All of this does matter, but per the OP may matter less than CAC + initial push into a market (brand-building etc.). Think of the cost to develop e.g. MS Word vs. the incremental cost to retain users (programmer salaries go up over time, they have to remodel the app ~annually, etc). If the WeWork model works in a market, they can buy buildings later (perhaps during a recession). > when a recession hits, it seems like the first offices a company closes has are the ones on a short-term lease at a co-working space I'm sure the other side of this argument goes something like the arguments against car ownership. Many companies won't have any long-term leases anywhere, will be more remote-friendly, etc. In fact some companies will choose to not re-up on long-term leases in favor of more flexible options like WeWork specifically because who wants to sign a long-term lease during a recession when visibility is poor?

taude 8y ago
Good points. I do think car ownership might be different because it's a depreciating asset with a limited lifetime of use. I think real estate and buildings, that lifetime can be significantly longer... It'll be interesting to see how this all works out for a lot of this generation "tech" companies.

koboll 8y ago

>Also, when a recession hits, it seems like the first offices a company closes has are the ones on a short-term lease at a co-working space.... Apartment rents spiked during the last financial crisis because people downsizing increased demand for them. It's entirely possible that downsizing companies might want to retreat from leases to smaller WeWork offices during the next one.

sk5t 8y ago
Aren't commercial leases typically of much longer terms than residential leases and less convertible than homeownership?