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> How can a renter make a profit by marking up the office space owned by real landlords I think there are a lot of plausible ways this can happen. The core id

> How can a renter make a profit by marking up the office space owned by real landlords I think there are a lot of plausible ways this can happen. The core idea I think is, it's like colo/dc vs aws. Both make sense in different circumstances. Higher pricing for flexibility, elasticity - avoiding lock-in while scaling up or down (maybe to 0) or moving location. Price transparency. Network effects, brand recognition, standardised services and high quality "overlays" to spaces like wifi, printers and presentation equipment that works everywhere. Social networks - in physical space, and improved discoverability of spaces themselves and related business clusters. There is also a scale play where you get big enough as an intermediary to beat up suppliers - because you can control and direct demand. Usually a landlord gets to extract surplus value from a location but as WeWork's overlays / brand / network grow powerful they have a stronger negotiating position. Consider the situation where WeWork is huge, and having one near other properties you own (housing, food, retail, etc) raises the value of those. You could take this further and who knows if WeWork will be the ones to do it, but there are definitely value improvements to be had over "negotiate with an agent and commit to an n-year lease, then do a fit-out". Serviced offices are a thing but scaling that idea _could_ be something else again.

bananaface 6y ago
I don't understand how having a wework near your restaurant would increase the value more than any other office. Either way the value add is a nearby space filled with professionals. Why would the wework brand increase that?
- xyzzy123 6y ago
  Good call-out, that point is not well thought through or supported. My mental model was demographics. As an example, Apple users are "more valuable" than Android users. Not in any absolute or moral sense of course, just in terms of average propensity to blow money on things. In a bifurcated economy not all office occupants are equal value. When I wrote that I had a model in mind where: Your average WeWork occupant is more likely to be young, mobile, well-paid, renting an apartment, eating out, preferring "services" over owning things, and so on. WeWork will be interested in tracking those demographics in ways that regular office lessors aren't, meaning they can tell that story and quantify the value they bring. It's not a strong point (and it's a little sickening) but I think the rest of the argument stands.

bananaface 6y ago

I don't understand how having a wework near your restaurant would increase the value more than any other office. Either way the value add is a nearby space filled with professionals. Why would the wework brand increase that?

xyzzy123 6y ago
Good call-out, that point is not well thought through or supported. My mental model was demographics. As an example, Apple users are "more valuable" than Android users. Not in any absolute or moral sense of course, just in terms of average propensity to blow money on things. In a bifurcated economy not all office occupants are equal value. When I wrote that I had a model in mind where: Your average WeWork occupant is more likely to be young, mobile, well-paid, renting an apartment, eating out, preferring "services" over owning things, and so on. WeWork will be interested in tracking those demographics in ways that regular office lessors aren't, meaning they can tell that story and quantify the value they bring. It's not a strong point (and it's a little sickening) but I think the rest of the argument stands.