Despite free-flowing kombucha, WeWork tenants feel unease
NEW YORK — The kombucha and beer on tap flow freely. The milk-and-cookie happy hours, yoga sessions and waffle Mondays continue as usual.
WeWork’s stock market fiasco has yet to reverberate much for its more than 600,000 tenants, spread across a global empire of gracefully designed co-working offices. But beneath the work-and-play cheer, there’s unease as WeWork embarks on a painful restructuring that will include thousands of layoffs as early as this week.
WeWork is slashing the lavish spending that fueled the office-sharing company’s breakneck growth and contributed to unsustainable losses that ultimately turned off Wall Street investors, forcing it to shelve its initial public offering.
Shannon Wilkinson, CEO of a small online reputation management firm, says her clients rave about the vibe at her WeWork in midtown Manhattan, where visitors walk into a loft-like space with cozy leather couches and a large sign reading “fortune favors the brave.” Floor-to-ceiling windows offer views of a neighborhood known as billionaire’s row, but Wilkinson pays just $95 a month for a basic WeWork membership.
“Despite WeWork’s bad rap in the markets right now, it is very convenient, and I believe it will stick around a long time,” Wilkinson said.
Not far away, though, Lanny Grossman doesn’t get the same vibe from the WeWork near Grand Central station, where the owner of public relations firm EM50 Communications shares a two-person office.
Emptier than other WeWorks just blocks away, the space is sometimes dark because too few people show up to trigger enough automatic lighting sensors, he said. At some point, the grab-and-go market disappeared. Recently, Grossman has noticed a slowdown in cleaning, with dirty coffee mugs still there the next day.
WeWork says there has been no change to cleaning schedules at that location, but Grossman said the issues have deepened his skepticism about the future of his landlord.
“It’s weird. I come in and have my computer and my office and wonder if it’s going to be there the next day,” Grossman said.
Japanese tech conglomerate Softbank, which took an 80% stake in the company, has sent one of its executives, Marcelo Claure, to oversee WeWork’s restructuring. Claure told employees in an email Monday that layoffs would start this week, summoning employees to an all-company meeting Friday to discuss the changes.
WeWork has said that the layoffs will not include the small “community teams” that work inside the shared offices spaces, and that many job cuts will come from sides businesses the company is selling.
Meanwhile, cleaning, pantry and facilities maintenance employees in the U.S. and Canada are being offered jobs at JLL, a real estate services company that will then contract those workers back to WeWork. Arik Benzino, WeWork’s managing director for U.S. and Canada, told the affected employees in an email last week that their pay would remain the same and their shift assignments “will not change for the time being.”
Behfar Jahanshahi, whose tech consultancy uses WeWork around the world, says he is eager to stick with the company but is watching the developments warily.
“What are they going to change that is going to impact us? Are they going to chip away at perks? Only clean every two days?” said Jahanshahi, CEO of Oklahoma-based tech consultancy InterWorks, who credits WeWork with helping him expand globally and says a company his size would have a hard time providing similar amenities on its own.