WeWork opens new sites at breakneck speed despite cash-burn concerns

WeWork has opened almost as many new locations in the last 3-1/2 months as it did in the whole first half of this year, likely accelerating the speed with which the office-sharing company is burning through cash as increasingly hard-nosed investors scrutinize its prospects for going public. WeWork has opened almost as many new locations in the last 3-1/2 months as it did in the whole first half of this year, likely accelerating the speed with which the office-sharing company is burning through cash as increasingly hard-nosed investors scrutinize its prospects for going public.
WeWork has opened almost as many new locations in the last 3-1/2 months as it did in the whole first half of this year, likely accelerating the speed with which the office-sharing company is burning through cash as increasingly hard-nosed investors scrutinize its prospects for going public.

According to a Reuters analysis of information on the company’s website, WeWork had 622 sites open in 123 cities on Oct. 10. That compares with its footprint of 528 locations in 111 cities on June 30 that was outlined in the prospectus for its abandoned IPO.

The website also identifies 89 sites as “coming soon” and 117 sites as “just announced” - all new locations that are yet to open.

Altogether, WeWork says on the website that it will soon have 845 locations in 125 cities, but it is unclear whether all those will still open. A WeWork spokesman declined to comment on its plans.

The quickening pace of new office openings adds to the risks for WeWork, a company that has created a global brand for its shared workspace concept but was forced to halt plans to go public on Sept. 30 because of investor concerns about how it was valued and whether its business model is sustainable.

The company is now cutting back, including laying off some employees and closing or selling entities that are not essential to its core operations as it seeks to avoid running out of cash. On Friday, WeWork said it will shut down its WeGrow private school in New York City as it pares peripheral operations.

The 97 new locations WeWork added in the first half of this year on average cost $2.63 million each in design and construction costs, up 38% from the $1.91 million that 82 openings each cost in the first half of 2018, according to the IPO document. It added 94 new locations between the start of July and Oct. 10, according to its website.

Whether the average size of a new location in the latest burst of openings is similar to those in the first half of this year is unclear. A WeWork spokesman declined to comment.


Source: Reuters Business News


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