WeWork is putting the brakes on its WeLive co-living platform amid higher than expected build-out costs.
The company currently operates two WeLive locations and disclosed plans for a third – a far cry from initial projections. In a leaked 2014 investor pitch, WeWork claimed it would open 14 locations by the end of 2016, and that those locations would account for 12 percent of the company’s revenue, the Wall Street Journal reported.
Sources told the newspaper that the cost of building out the firm’s first two co-living spaces – at Rudin Management’s 110 Wall Street and at Vornado Realty Trust’s Crystal City in Washington, D.C. – were higher than expected. In response, the company decided to primarily put co-living spaces into new developments. The Real Deal recently reported that WeWork and Kushner Companies are considering the ground-up Jersey City development One Journal Square as a WeLive location.
WeWork has grown rapidly since it was founded in 2010 and reached a $16 billion valuation in its latest funding round, but it recently backtracked on its more ambitious growth projections. According to leaked internal documents, the firm cut its profit projections for 2016 by 78 percent. It also fired 7 percent of its staff earlier this year, although the company said it would continue to expand its workforce.
Meanwhile, the company faces competition from a growing number of co-working firms. WeWork slashed the monthly price of a one-person office at its Dumbo location to $550 from $750, the newspaper reported. [WSJ] – Konrad Putzier