Shared desks and free-flowing pantries may run counter to social distancing, but WeWork says enterprise clients are increasingly opting for the flexibility of its office spaces, as companies reimagine the workplace amid the coronavirus pandemic.
Speaking to Yahoo Finance, chief product and experience officer Hamid Hashemi said the company is seeing greater demand “net-net,” even as independent workers and smaller businesses move out, to cut costs.
“Enterprise is about 46% of our business now. We expect that number to grow to 70% to 75% of our revenue over the next 12 months, just because of the demand that’s there,” Hashemi said.
Commercial real estate firms are scrambling to redesign office spaces to address health concerns, as companies begin to ease employees back into the workplace. While those like Cushman and Wakefield have developed prototypes with layouts that encourage social distancing, WeWork has positioned itself as an alternative, for companies looking for more flexibility and a smaller footprint.
The company recently unveiled software that helps human resources departments map out the closest WeWork locations for employees, enabling teams to work together without commuting into larger offices. The service is currently being beta tested in London, and will be rolled out in the U.S. this year, Hashemi said.
“If you have 4,000 people, they don’t all have to be in one or two locations,” he said. “This software will tell you automatically about how you can reposition. You can put in the parameters … You can think of the city as a campus.”
With the timeline for a COVID-19 vaccine still in doubt, Hashemi said enterprise clients are increasingly treating workspace changes as a variable cost. Limiting employee commutes on public transit is also a key concern, to prevent infections from spreading. WeWork’s short-term leases and its large footprint, 739 locations across 37 countries, allows companies to adapt to their needs, he said.
Demand for flexible space ‘even greater’
The largest private renter of New York office space, WeWork is looking to bounce back under new leadership, after a tumultuous year. The company nearly collapsed after investors pushed back against its high valuation and questionable balance sheet, in a failed IPO attempt. That led to founder Adam Neuman being forced out.
Earlier this week, investors filed a class action lawsuit alleging the company, under Neuman, downplayed its losses as “strategic investment spending that would lay the foundation for profitability.”
The interview with Hashemi was conducted prior to the filing.
The company remains in a precarious position, both as a tenant and a landlord in the midst of the economic downturn. In a recent interview with CNBC, CEO Sandeep Mathrani said the company paid rent at more than 80% of its locations in April and May, while it collected over 70% of its rents from tenants. Hashemi said the firm was handling requests for rent deferrals on a “case by case basis,” adding that there is “only so much we can do.”
Social distancing measures along with cleaning and disinfectant services have only added to the costs, though the company said it has not passed that onto members yet.
Even with all of the headwinds, Hashemi said WeWork is moving ahead with expansion plans, as scheduled. The company plans to open 80 to 90 new office spaces before the end of the year, with additional buildings in the pipeline for next year.
“We truly believe and firmly believe that the demand for flexible space is going to be much greater,” Hashemi said. “People have recognized that you don’t have to have a corporate headquarter with 5 thousand people or 4 thousand people. You certainly can work remotely.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita