>but what's stopping a building owner from offering hot desks + coffee themselves?

That is not at all what WeWork offers. I'm typing this from a Regus office space (probably the best known incumbent), and having worked out of WeWork offices at other times, the difference between the two experiences couldn't be more stark.

A lot of companies try to claim to be "tech companies" when they're really just doing some mundane thing, in the same way as ever, but with a "tech" sheen on the website. (Maybe some green kanji characters scrolling down a black background, that sort of thing.)

WeWork really is different. I've seen some of the tech they deploy to improve the density ratio of the buildings, and to track different aspects of their customers' experience, and on and on. I'll grant that there aren't many barriers to entry in a small-scale, "hey, here's a desk and hot coffee" local market -- but very few companies can create the kind of global footprint that WeWork now has, which is a big part of the main strategy, going after the office needs of the Global 2k.

I've used both Regus and WeWork and would pick Regus over WeWork any day. I am so much more productive at a more laid-back, quiet (both sound and visual noise) environment than the hustle and bustle that WeWork takes pride in. WeWork calls this energy, I call it noise.

Seconded. I'm at WeWork now, and had to upgrade offices just so I could be somewhere that was quieter. Once my contract is up I'll be looking for a more out-of-the-way office where I don't need to put on headphones several times a day.

Thirded. WeWork has horrible sound design.

for reference, IWG's market cap (the parent of Regus) is $3.8bn

I hear you on that end of tracking customer experience.

That being said, they trump up their internal social network as part of their valuation, but it barely gets used in my WeWork and I can see globally that it doesn’t get used much except for selling and some reference requests.

It’s used at a rate of like less than one posting a month per person.

>very few companies can create the kind of global footprint that WeWork now has

If other companies were able to lose $900m/yr and still operate I bet they would be able to create that type of global footprint

Yes, but that's a rather large if, isn't it now? Access to capital is a moat all its own.

Most commercial buildings are held by investors/funds who tend to own thousands of units. They probably have an in-house staff of property managers who places tenants, schedules repairs/improvements, etc. Managing co-working space would be a totally new way of doing business for these funds which represents a risk they're not currently interested in taking.

To be fair there is not a single commercial REIT worth more than $35B [1]. WeWork is certainly large enough to own real estate, but they want to be valued like a tech company and you can't do that if you look more like a REIT.

https://finviz.com/screener.ashx?v=111&f=ind_reitoffice&o=-m...

Dexus, a company that manages real estate only in Australia has $26 billion of property under management, split about 50% owned by them and 50% managing for other people. Their total portfolio is under 150 properties. That's all in a country with 20 million ish people. You could get a lot bigger than that.

But of course it wouldn't be the quickest way to grow since you'd need insane captial. If your competitive advantage is the extra return you're squeezing from the properties, makes far more sense to lease them so you can have more, rather than be buying them upfront.

https://www.dexus.com/who-we-are

Plus, the property owners can just raise the rent on WeWork and only take the upside with little operating risk.

>Anyone else find it interesting that WeWork doesn't own any real estate? They literally lease and sublet office space (although they provide amenities...do those justify the valuation?). Granted there is some brand value, but what's stopping a building owner from offering hot desks + coffee themselves?

Owning commercial real estate in today's market == losing money.

Rent to buy ratio is all time high.

Not owning real estate is the reason for the high valuation. Hilton and Marriott discovered this a long time ago, and more recently AirBnb.

Traditional property owners don't have the skills to build the technology system needed to manage a large co-working space.

hot desks?