3 ms·

Can you run this model without charging higher-than-market-rate leases and without relying on early stage startups that come with huge churn?

• ameister14 6y ago
  I'm not an expert but I think the 'higher than market rate' part is tough because you're offering services. In non-commercial terms, it's a nicely appointed doorman building with utilities included and an indoor gym vs a no frills apartment. So you can expect to pay more - the question is how much more. For the wework tenant, the cost/benefit should include the price of outfitting an office as well as internet and the benefits the perks provide for employee satisfaction, recruitment and retention. So if you can put a value on that and push it over the time period of the lease, you can do the math on how much more you'd be willing to pay. For the company running the offices, a lot depends on what deals you can cut with building ownership - for example, a lot of buildings will give you 6-12 months or more free while you remodel, so if you get that done quickly you end up with 3-6 months free; you can use that over the life of the lease to increase margins or have space where you can offer rebates to your customers as well; though that depends on how quickly you can fill the offices. This was one of the things that I think is killing wework - they started signing deals with buildings without negotiating hard and they gave too much stuff away in contracts with their own customers.