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WeWork CEO expects strong rebound for shared office space in post-Covid return to work

WeWork CEO expects strong rebound for shared office space in post-Covid return to work

DIGITAL MARKETING NEWS

WeWork CEO expects strong rebound for shared office space in post-Covid return to work

WeWork CEO Sandeep Mathrani told CNBC on Friday the office-sharing firm expects to see a strong recovery in demand as Covid vaccines help control the pandemic.”There’s going to be a huge shift in coming back to work, and we’re a flex provider, so we’re completely the person who would see it first because we’re plug-and-play,” Mathrani said on “Squawk Box.” “We’re starting to see, even in New York now, new activity, so we’re pretty optimistic.”Mathrani’s comments Friday came shortly after WeWork announced its intentions to go public through a reverse merger with BowX Acquisition Corp., a special purpose acquisition company. The deal values WeWork at $9 billion, including debt. It’s expected to close in the third quarter.The company’s private-market valuation had reached roughly $47 billion before its failed initial public offering in 2019. WeWork’s plans for a traditional IPO were shelved in response to weak demand, a falling valuation and governance concerns. Its co-founder and then-CEO, Adam Neumann, was pushed out that year.SPACs have boomed in popularity in the past year, offering an alternative way for private companies to reach the public markets. Sometimes called blank-check companies, SPACs raise capital through an IPO that is used later on to merge with a private firm, thereby taking it public.The amount of money raised by SPACs in 2021 has already exceeded all of 2020, when the wave of blank-check companies began to pick up. However, there have been signs that investor enthusiasm for SPACs has waned recently.A man enter the doors of the ‘WeWork’ co-operative co-working space in Washington, DC.Mandel Ngan | AFP | Getty ImagesMathrani, former CEO of Brookfield Properties’ retail group, said the timing of WeWork’s deal made sense coming out of the pandemic, which disrupted the commercial real estate market as companies were forced to adopt remote work.Some companies, such as Jack Dorsey’s Twitter and Square, have said employees can work remotely permanently after the pandemic. Other companies expect to have hybrid arrangements going forward, allowing staff flexibility to work some days in the office and some days remote.That plays into WeWork’s strength, said Vivek Ranadive, chairman and co-CEO of BowX Acquisition Corp. Ranadive is also the owner of the NBA’s Sacramento Kings and the founder of Silicon Valley’s Tibco Software.”Companies have now decided that flex space is a must-have. Maybe for their own headquarters they want to own that space, but for everything else, they want to hand it over to a WeWork,” he said on “Squawk Box,” appearing alongside Mathrani. “Covid was actually a tailwind for flex space,” Ranadive added.WeWork had 859 locations in 151 cities globally, as of November, according to its website.Mathrani, who became CEO in February 2020, said WeWork is seeing occupancy at its locations rebound, particularly as of late. “We see green shoots today. We’ve got 33 markets that are up double digits in the last 60 days all around the world, starting off in Asia and going all the way to America,” he said. As part of its deal with BowX, WeWork will receive about $1.3 billion in cash, which includes $800 million in a PIPE, or private investment in public equity. Mathrani said the PIPE was larger than WeWork initially expected, illustrating the belief institutional investors have in a comeback.”I think people are making bets that, effectively, you’re getting a company at a pre-vaccine price for a post-vaccine company. They’re seeing a huge rebound in the business of flexibility,” he said.


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