WeWork Layoffs 2019: CEOs Warn Staff In Leaked Email, Despite SoftBank Investment

Uncertainty in the co-working office space company WeWork is up. According to the latest news, co-CEOs Artie Minson and Sebastian Gunningham have told employees to face layoffs “in the coming weeks,” in an internal e-mail.

Earlier Business Insider also wrote about executives having warned employees internally that job cuts are coming and it could slash 25 percent of the total workforce.

“As part of refocusing around our core business, we are strategically reorganizing our operating model to create a leaner, more efficient organization. As we have mentioned, this will result in a smaller, global workforce ... While we cannot commit to an exact timeline, we expect this exercise to roll out largely by function and over the coming weeks. In certain jurisdictions, the timing may be different," the co-CEOs wrote in the email.

They also said WeWork is still opening new buildings worldwide and is hiring support people known as community managers or “community staff.”

The CEOs said downsizing will not hurt Community teams and their strength will continue to grow as new buildings come online throughout the world.

Securing fresh funds

WeWork, speculated to run out of cash has been working on many plans to secure new financing. Currently, it has two options for funds—a JP Morgan mediated package by banks and institutions and a bailout package by SoftBank that values the company at $7.5 billion and $8 billion respectively, per CNBC report.

The board of WeWork will meet on Tuesday to take a call on the financing plan. The media has been buzzing with reports predicting a potential WeWork bankruptcy.

However, the CEOs sought to play down the financial problems and said such reports were “rumors or speculation originating from outside the company.”

The executives also assured employees that those affected by job cuts would be given severance pay without going into the details.

How WeWork’s retreat will affect office real estate

In early 2019, WeWork had been leasing 500,000 to 1 million square feet of new space in cities, every day, around the world. That huge growth had made it resemble as if the next Amazon or Uber is in the making with so many USA jobs on offer.

WeWork also became the largest office tenant in New York City, surpassing J.P. Morgan Chase in 2018.

There is a concern as to what will happen if WeWork crumbles, especially in Manhattan, where flexible office space is in huge demand just as the Manhattan drink.

WeWork’s fundamental problem has been that despite marketing itself as a tech innovator it is a middleman and not the owner of the real estate offered.

But demand in the co-space working space will remain strong with or without WeWork, say market experts. The market of flex rentals is undergoing a sea change and that predates the troubles with the We Company.

If WeWork exits, nothing will stop landlords from building their own flexible offices and renting out them in pieces.

“How landlords will incorporate coworking spaces in their portfolios going forward is an open question,” commented Julie Whelan, head of occupier research for the Americas at CBRE.