Once valued at $47 billion, the office-sharing firm WeWork now plans to file for bankruptcy as soon as next week, according to the Wall Street Journal. Recent news reports say the flexible workplace firm never recovered from the exit of its cofounder and the remote work shift during the pandemic.
Christopher Kayes is a professor of management and the chair of the management department at the George Washington University School of Business. He is an expert on leadership, resilience, teams, and workplace well-being. Kayes’ research on experiential learning, leadership and resilience has appeared in more than 100 peer-reviewed publications
Kayes shares his thoughts on what this news might signal.
“WeWork is a victim of changing work habits. Post-pandemic, the demand for office space is at a generational low. Office space is renting or selling for a fraction of what it was worth pre-pandemic. So not only is there an excessive of office space, but selling that space is more complex than ever. Investors in real estate, which is essential to what WeWork is, are taking a huge loss right now.
But even more important, the fall of WeWork signals that the excesses of the last decades are being put to rest. Companies such as WeWork, built on the promise of sky-high growth and double-digit returns to investors, were illusions without any sustainable business models behind them. In search of growth, the co-working company evolved from a leaser of business space to a tech company to a merchant of culture, but none of this ever made sense as a business model. You can't expect the same returns from a real estate company that you can from a software company - it just doesn't work.
As interest rates have returned to historic levels, the cheap money that enabled the financing of companies like WeWork to thrive was the match in the powder keg.
WeWork, Theranos, Silicon Valley Bank, and other failed companies will be remembered as symbols of the business excesses and failed business models of our time.”
If you would like to speak with Professor Kayes, please contact GW Senior Media Relations Specialist Cate Douglass at cdouglass
gwu [dot] edu (cdouglass[at]gwu[dot]edu).
-GW-
