We don’t often discuss WeWork on EYE, partly because it’s ‘just a pretty Regus’ and partly because it deals in offices rather than homes.
However, it’s an interesting story with implications for estate agency.
First a little background: WeWork leases buildings and sublets to start-ups and companies looking for flexible space – at a substantial mark-up.
It offers working environments that are the epitome of cool and are now being widely copied.
How cool is WeWork? $10bn worth of cool – and that’s not even how much the company is worth, but simply the cash that investors have forked in to help WeWork grow.
So when it announced the purchase of a headquarters building in New York for $850m, the world sat up and took notice.
Within days it went on to announce the purchase of a large office complex in London for another $850m. That amount is obviously their sweet spot.
So the company that many in the commercial property industry dismissed as over-valued hype has begun to flex some of that $10bn muscle.
Why does WeWork matter? Well, they mostly let directly – that is, without the use of agents.
So not only are they reducing the aggregate fees available to the industry, but they’re making it normal for tenants to go direct to office providers.
But surely this doesn’t affect residential property?
Let me introduce you to WeLive. It’s pretty much as you think: WeWork for residential property.
An American business, it leases buildings in central locations – you know, where people these days would like to live when they are young/young-ish. And it provides a standard of service that is miles better than that offered by your accidental landlord using a local managing agent.
Flexibility is a key component of the offering: a tenant cutting their residency short isn’t a problem because WeLive is confident in its ability to let.
The welive.com website is filled with images of people having fun and being happy with their lot in life. There’s almost no sign of property whatsoever.
And that is what makes WeWork/WeLive attractive to users: both focus on life and living. The property itself is a means to working/living better.
Or so they say. Today WeWork is a very expensive proposition. That flexibility and ease of experience comes at more than double the price of finding your own lease.
And WeLive means living in what are essentially dormitories for adults. Privacy isn’t something you’ll have much of.
Whether WeWork and WeLive are for you, their standards of letting and management set a new high bar for everyone else to live up to.
While there are ways to buy in the software to, say, report issues from tenants or improve communication, it is exceedingly hard to buy in “cool”.
Today, traditional lettings agency – commercial or residential – has a role to play in finding buildings for WeWork to lease.
In the future, those buildings won’t need letting agents.
Out of interest, my company has just moved into a building operated on a similar model to WeWork, and we enjoy flexible office space in various configurations to suit. But the really interesting thing is that this building houses NatWest staff.
NatWest wants to provide their staff with the flexibility and coolness that it couldn’t achieve running its own office.
A future could be opening up where the option to pay WeWork or WeLive becomes the go-to.
Property could look a lot like the world of taxis, TV and social, where a single brand like Uber, Netflix or Facebook dominates and becomes everyone’s default option.