WeWork's troubles seem to be going from bad to worse.
They lowered their target IPO valuation from their last private funding round value of $47 billion to under $20 billion - and maybe as low as $10 billion.
But after reading about WeWork's huge losses and highly questionable corporate governance practices in their S-!, even that wasn't enough to attract investors. So they postponed their IPO.
And this weekend various media outlets are reporting WeWork's board is considering replacing their flamboyant CEO, Adam Neumann.
But despite WeWork's woes, the coworking industry is doing just fine.
As we pointed out a few months ago, the coworking industry continues to surge and WeWork's problems won't change this.
Coworking rapid growth has been driven by 3 waves of customers. The first wave consisted of freelancers and independent workers who were coworking's first customer base. Quickly following them were startups and micro-businesses. More recently large corporations have embraced coworking.
In other words, firms of all sizes and shapes are increasingly using coworking spaces. And going forward we also see a fourth wave emerging. This wave will be driven by niche and vertical market growth and geographic expansion.
And despite coworking's recent rapid growth, it still has a lot of room to expand.
According to a recently released CBRE study, there currently is 71 million square feet of flexible office space in the 40 U.S. markets it studied.
This is just 1.8% of the office space in these markets.
CBRE is forecasting that this will grow to roughly 600 million square feet, which is about 13% of total office space, by 2030.
Having said all that, WeWork's problems will impact the coworking industry.
In the short run, there will be a lot of negative press and coworking's naysayers (and there are quite a few) will suggest the industry is not sustainable.
This will result in potential customers becoming hesitant about committing to coworking. This will be especially true for large corporations.
But this will pass and WeWork's current struggles mean it will likely have to focus on profitability, which will be good for the industry in the long run.
It's also important to point out that while WeWork is the industry's largest firm, it is only 1 of over 700 coworking and flexible office space companies operating the U.S.
So even in the unlikely event that WeWork fails, there are plenty of coworking firms ready to pick up the pieces.
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