11 September 2017 | Adam Leach
Co-location giant WeWork is having a stellar 2017 as it grows apace - with larger corporates a growing part of its client base. Adam Leach reports
It may have built its brand on the back of ping-pong tables in break-out rooms and free beer offers in its bars, but co-working upstart WeWork is increasingly turning its attention to the kinds of companies that its initial target market is seeking to disrupt.
According to figures released by the company at the start of September, the company has almost doubled the amount of enterprise clients for which it provides space - organisations with more than 1,000 staff - who are siting staff within its co-working spaces.
WeWork provides temporary office space to start-ups and SMEs but its appeal to larger companies has been in its provision of some much sought extra flexibility in their operations.
The figures show that from June 2016-June 2017, the number of such clients increased by 90 per cent. Furthermore, and a clear sign that such clients are cutting more substantial deals with them, the headcount of occupants from such companies increased by 360 per cent.
This increase is starting to make significant inroads into the WeWorks revenue base, with enterprise clients now accounting for 30 per cent of its revenues, even though they only constitute 20 per cent of tenants.
Having signed up major global firms such as Microsoft, Salesforce and HSBC to its client base in recent years, the New York-based firm is clearly attracted to the higher volume and longer-term deals that those at the top of the corporate ladder can offer.
Furthermore, it is likely that the company will now seek to further expand into this sector, having just received an investment of $4.4 billion from Japan's SoftBank to fuel expansion.
WeWork is surfing a wave of change that is seeing increasing numbers of corporates deciding to eschew the provision of standard nine-to-five offices in favour of offering managers the option to use 'shareable' office spaces depending on the particular need of individuals or project managers at any particular time.
As for WeWork's business model, the issue is one of sustainability. WeWork takes on long leases for often substantial amounts of space, then gives tenants flexible terms. Clients can use space for a single month or give just a month's notice, exposing WeWork to vulnerability should clients start leaving en masse.
However, the corporates now taking space are typically committing for longer periods, giving WeWork more stability while at the same time giving those corporates the benefit of a certain caché and connection to the 'cool' culture associated with the WeWork brand.