I was a tenant at WeWork, and the way I would describe it to my friends was that it was like going to work on an all-inclusive cruise.
Every few weeks, a friendly WeWork employee would poke their head into my office and offer cookies or sangria from a rolling cart. If I wanted to get out of my chair, I could get cold brew or kombucha from a tap in the kitchen. The people running the space — Chloe, Eric, Shay — were bubbly, freshly-scrubbed twenty-somethings who seemed like they’d popped out of a “Friends” episode. The biggest headache I had was people who would camp out in the well-insulated, cocoon-like phone booths, even if they weren’t on a call. There were never enough phone booths.
It was hard to keep up with how many WeWork locations existed in Boston at any given moment. Just in the stretch of downtown between mine on the top of Beacon Hill and South Station, there were three others. Two more sat across Fort Point Channel in the Seaport. No one in commercial real estate quite understood how they planned to grow so fast, even before the COVID pandemic prompted millions of people to work from home. WeWork filed for bankruptcy this week, hoping to reorganize its business and extract itself from some of its lease commitments.
Why was I there? Ten years ago, I started a small digital media company with two friends I’d initially met working for the Globe in the 1990s. At first, when we needed to use conference rooms and outside-of-the-house workspace, we bought memberships at the Central Square location of Workbar, a regional chain of shared workspaces.
But then WeWork opened a shared workspace a block away on Massachusetts Avenue. It was newer, with a more modern design, and they were happy to cut deals on rent to fill it with members. In April 2017, we moved into a small office at the end of a hallway that felt a little like a fish tank, with glass walls on three sides. When our company grew, we found more space the following year at an even newer WeWork at One Beacon Street. From the windows, we had views over City Hall, the North End, and the inner harbor.
My media company was not the only small business lured away from Workbar, says Sarah Travers, who joined that company in 2017 and now serves as its CEO.
“It was very difficult to run a business in parallel with WeWork,” she said. “They quite literally would say to Workbar’s tenants, ‘We will pay your moving costs, give you twelve months free rent, and pay your broker fees if you have them.’ Everybody was lured over to WeWork. It was shiny and new.”
When Workbar was looking for new locations in Boston, Workbar founder Bill Jacobsen said, “Every time we looked at a new space, we would have to contend with comparable space lease deals from WeWork that we just couldn’t agree to or justify.”
Workbar decided to focus on suburban locations, as WeWork was planting new locations around Back Bay, the Financial District, and the Seaport.
As a WeWork tenant, it was obvious that rents were being subsidized by WeWork’s venture capital investors — much in the same way cheap Uber and Lyft rides had been. I got that same feeling when I visited a spiffy WeLive residential space that the company had opened in Lower Manhattan.
I was at a Fortune conference in Aspen in mid-2016, and got to see WeWork cofounder Adam Neumann and his wife Rebekah, the company’s former chief brand officer, speak.
“Our mission is to help our members create their life’s work — not just a living,” Neumann said grandiloquently. I asked a question about what might happen to the company in the next recession. Neumann spun things masterfully.
“When times are tough, people want to be surrounded by other people,” he said. “We have a lot of staying power.” He alluded to 45 percent margins; when the company filed to go public three years later, it was still unprofitable, and the company’s gross margins were nowhere close to 45 percent.
Tim Rowe, the founder of CIC, a network of shared offices in Cambridge, Boston, Tokyo, and other big cities, says that when he read the WeWork initial public offering in 2019, he had trouble deciphering it.
The company’s strategy, he says, was that “we’re going to have cool and low cost space. It’s no surprise that they could open 700 or 800 locations, because a lot of people want that. But the math didn’t actually work, [unless WeWork made up the difference] using their investor money.” Rowe acknowledges that CIC’s office space has not always been the cheapest option for tenants, but “it’s why we’re still here after 24 years,” noting that it has always tried to bring together a mix of startups and larger companies that want to participate in the local ecosystem. One new tenant is a federally-funded healthcare hub, ARPA-H.
Rowe says that his company is now “avidly looking at former WeWorks,” both in Boston and elsewhere, to potentially convert into CICs. Travers at Workbar says her company has continued pursuing its suburban strategy, opening new locations in Needham, Quincy, and Framingham. She expects WeWork to emerge from bankruptcy “as a leaner, smaller company” — and perhaps one that franchises its brand to others who want to manage shared offices.
WeWork has already closed three of its locations in Boston, but it still holds leases on about 750,000 square feet of office space, says David Townsend, managing director at commercial real estate firm Newmark. Companies in those surviving WeWork locations may not want the uncertainty of having a landlord navigating the bankruptcy process, and “will probably think about moving out,” he says. As WeWork considers how much space it wants to hold onto in Boston, that’s 750,000 square feet “worth of potential pain” for the local real estate market — space that “the market doesn’t need to have back at the moment.”
As for me, I paid a penalty in mid-2020 to get out of my WeWork lease early, since no one with whom I worked had any plans to return to the office.
Most days, you can find me in my home office where, sadly, there are no cookie or sangria carts.