Real Estate Use Changes

Shaan Puri shares his perspective on WeWork and the coworking industry, focusing on real estate value creation through change of use. Despite WeWork's dramatic fall, he believes in the fundamental business model and future of coworking spaces.

• Real Estate Value Creation Principle:

  • Maximum value comes from changing how space is used
  • Example: Converting warehouse rates to self-storage rates increases per square foot revenue
  • WeWork applied this same principle but with people instead of storage

• WeWork's Business Model:

  • Fundamentally sound real estate play
  • Similar to self-storage business model
  • Main issue was management/leadership, not the core concept
  • Pandemic was "worst possible thing" for any coworking company

• Future of Coworking:

  • Predicts 2-3 multibillion dollar coworking companies within 10 years
  • People "love to shit on WeWork" but the space itself has merit
  • Industry will have clear winners despite current skepticism

• Alternative Coworking Models:

  • Banks exploring coworking (Capital One example)
  • Potential for tech companies to use coworking as recruiting tool
  • Value proposition: Break even on space but gain talent pipeline
  • Benefits from having potential hires in company orbit
  • Could offset costs through recruitment savings