Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
IT ALL LOOKED so bright in June 2018.
The year before, WeWork had raised $760 million, taking its valuation to $21 billion. This would more than double to $47 billion just months later.
Investors were euphoric about the potential of the company – which rents out buildings and then leases them out again, normally as trendy coworking spaces – to revolutionise the modern office.
From an Irish perspective, the company had just been announced as the anchor tenant to the Central Plaza scheme, which centred on redeveloping the old Central Bank building on Dame Street in Dublin city centre.
WeWork was to take over almost the entirety of the nine-storey old building. It was hoped this would create a beacon for Ireland’s modern economy – a huge, modern coworking hub in the heart of the capital, where the best and brightest would mix and innovate.
Anyone with a passing familiarity of WeWork knows where this story is going – downwards.
The US firm is deep in crisis, with reports earlier this week revealing it intends to file for bankruptcy in an effort to restructure its debts.
Shares have tanked. The price of the company’s stock has more than halved since the bankruptcy reports came to light and is down by about 99% in the last year alone.
Weighed down by a combination of factors – from a massive debt pile to mounting losses to the increasing prevalence of work from home – WeWork is now in serious danger of going out of business.
WeWork’s strategy was inherently risky. Essentially acting as a middleman between a landlord and a tenant, the company relied on marketing itself as a kind of tech firm to get investors excited.
There is some merit to its model. Giving tenants the option of just leasing small co-working spaces, rather than entire office floors or buildings, can be useful for many small traders or startups.
The problem was how WeWork over-extended itself. Borrowing massive amounts of money, the firm aggressively expanded, taking out long-term leases in prime offices around the world.
It did the same in Dublin, becoming one of the largest players in the capital’s commercial property market.
As well as the office space at Central Plaza, the company has a presence at Harcourt Road and the Charlemont Exchange near the Grand Canal and the 2 Dublin Landings building in the docklands.
While it was banking on the co-working model delivering full buildings, since the pandemic, occupancy at its offices has hovered at around 75%.
While WeWork isn’t done for yet, the future looks bleak.
This is where Ireland, or more specifically, Dublin, comes in. As the company’s struggles could hardly have come at a worse time for the capital’s commercial property market.
Although not to the same extent, many commercial property firms are suffering from similar problems to WeWork.
High interest rates and climbing levels of office vacancies have dented the sector. In 2018, when WeWork agreed to take over the old Central Bank building, prime new offices were being snapped up before they were even built.
Now, less than a third of offices under construction are pre-let and it is predicted the vacancy rate in the capital could hit around 17% by the end of the year. The major problem seems to be a simple one of oversupply, exacerbated by many tech firms cutting their headcount last year and landlords being slow to cut rents.
The collapse of a major player in the space would be another body blow for the market.
Central Plaza
The Central Plaza project could be viewed as symptomatic of WeWork’s decline – big plans which have proven tough to execute.
When the firm was announced as the anchor tenant in June 2018, it was envisaged it would be in the building before the end of 2019. While Covid happened, the opening date was pushed back multiple times even after the pandemic had eased.
WeWork signalled earlier this year that it wanted to renegotiate nearly all of its leases around the world, as many of these were agreed at high prices in a pre-Covid world.
Despite this, as recently as September, Hines, the developer behind Central Plaza, said WeWork was on course to open in Central Plaza in May 2024.
Even if WeWork does get Central Plaza up and running as planned, occupancy could well prove to be a major challenge.
With high commercial vacancy rates generally, several analysts have predicted somewhat of an easing of demand for coworking spaces, especially as work from home has stuck around.
With prices starting from €45 a day for a hot-desk, it isn’t too far-fetched to think WeWork may struggle to fill the building. Not a pleasant option to consider for a company in need of cash as fast as WeWork.
Dublin’s office market is predicted to bottom around the middle of 2024 – unfortunately for WeWork, right around when its Central Plaza floors are set to finally open. If the company is still even trading by then.
For both WeWork and Dublin’s office market more generally, things could well get worse before they get better.
To embed this post, copy the code below on your site
Great to see this company going under. We let far too many of these hyper greedy capitalists unconditionally meddle in our affairs.
@Dissasociated Follower: darn capitalists creating all that economic value!! How dare they!!
@Dissasociated Follower: cos communism/socialism has worked out so well for the countries where its the economic model.
@Dissasociated Follower: a little jealous you couldn’t do it yourself???
Rebranding coming….. “It won’t work”
@Mark Callinan:
or for 2024 “ please for the love of god will ya come to work ffs ”
@Mark Callinan: The business model was a good idea but ultimately is a failure. No amount of restructuring will fix it
Exactly what’s wrong with our economy, company acting as middle man, completely unneeded in most situations, being prioritised by government, paying low tax in Ireland, restrain the building of some of those offices and build apartments..
@Noncinbo: A bit like Enron.
(Does anyone remember Enron?)
Enron started out as an electricity supplier, then discovered they could corner the market by “buying” up the output of other electricity suppliers and, when they had the supply locked in, charge what they wanted to sell it on.
(Shareholder) Capitalism 101.
Of course, Enron were also very naughty with certain accounting practices.
€45 per day for a hotdesk … good luck finding mugs
@Temp Stuff: it’s actually €25 per day. I’m heading to Charlemont Street tomorrow. While that’ll be my first time in a WeWork, they have an on-site barista (free) and apparently beers from 3pm everyday (free). Easily see why they going under, you could make your €25 back no prob!
@Temp Stuff: €45????….where are you getting that figure?
@Alison Hughes: from the article….
@Eoin O Shea: Why does it say 45 per day on their own website? Charlemont Exchange -> Hot Desk Day Pass -> from 45 per day
It never worked.
I don’t think WeWork is filing for bankruptcy.
I think it is filing for bankruptcy protection, known as Chapter 11 in the US.
I think this is somewhat equivalent to our own examinership.
Michael Martin should know on his trip to China that he is representing Ireland and not the EU. He needs to think for Ireland and not be repeating whatever Ursula Von Der Lying says. Are we not a sovereign country anymore or what.
@: agree but you have to understand that precisely because the opinion polls are showing they are likely to get pasted in Irish elections so they are pushing their international credentials for to take the stage eu political gravy train – I mean to represent us as MEP in future – it’s so blatantly obvious watch the number of times they all appear on RTE news stories on anything , any war , any geo political distraction that doesn’t involve answering hard questions about housing , homeless , poor infrastructure , health “crisis” – or any actual IRISH problems , border management , international welfare abuse , prisons , criminal justice the list is endless , but no we have to listen to their BS hot air pontificating about Gaza ffs
@Dave Hammond: Well spotted. They can all take a long-term view when it comes to career planning.
Big egos what can you not do at your kitchen table with a laptop on good WiFi.why would anyone starting up waste at least €45 a day to rent a hot desk
@Pj Browne: Depends on the size of the kitchen, depends on the size of the table, depends on the number of people vying for your attention, depends on the hardware available to you, depends on the networking opportunities, depends on the separation of work and home, depends on the type of work …
@Pj Browne: When the work expands, though? They’d otherwise be leasing offices and buying new desks and chairs and so on. It must be a lot cheaper than having their own building for the sake of prestige?
Why do investors keep failing for this crap…bitcoin is next
@David Cotter: I’d say you’re a huge business expert!
Surely the logical thing to do is convert some of the floors in these empty buildings into apartments?
Imagine if the central bank and many other office sites had been designated for residential use. Offices sit empty (can be assumed more to come), this will lead to the further demise of the city. Meanwhile so many cannot find somewhere to live.
@Bat Boy: It’s daft; the more people living & working in Dublin, the better for the city.
Correct me if I’m wrong but didn’t they offer shorter leases then their competition. That was the risky part when demand dropped.
This fellas articles are always interesting.
have your say