The co-working space provider occupies an alternative place in the global real estate sector, and has raked in billions in funding from SoftBank.

WeWork secured another $3 billion in funding from Japanese conglomerate SoftBank this month, adding to the $500 million it raised earlier this year from investors, including SoftBank and Temasek Holdings. In 2017 SoftBank’s massive Vision Fund invested $4.4 billion in WeWork and its subsidiaries in Japan, China and South Korea. Needless to say, SoftBank is a true believer.

WeWork is in the business of branded co-working: It leases office space, outfits it with amenities and a stylish aesthetic, and rents it out to freelancers and startups, as well as big businesses, on a flexible, short-term basis. Since its founding in 2010, it has expanded to nearly 500 locations in more than 30 countries. By some accounts, it is valued at as much as $20 billion.

WeWork’s success has made it a topic of debate. Some argue that its business model only works in a strong economy that allows it to lock in leases and re-rent the space at a premium. It will not survive a downturn, they say, because most of its clients will be unable to pay rent. “While the company’s flexible contracts may be ideal for small companies, WeWork would inevitably face trouble leasing their spaces if start-ups began to dry up or if the real estate market experiences a downturn similar to the 2008 financial crisis,” according to research firm CB Insights.

Writing for the New York Times, columnist Andrew Ross Sorkin counters that, on the contrary, WeWork may be too big to fail: “WeWork has gobbled up leases for so much space in so many cities, there’s a compelling case to be made that its landlords wouldn’t be able to afford for it to go under.” Sorkin cites Thomas J. Barrack Jr., a long-time real estate investor and founder of Colony Capital, who said that because of WeWork’s size, “they have more power in a down market.”

WeWork originally marketed itself mainly to individuals and small businesses, but its fastest-growing segment is now big companies, including IBM and Microsoft, which are signing longer leases. It is continuing to grow and consolidate its power. As Sorkin notes, “The company has said it is the largest real estate tenant in New York, London and Washington. It ranks in the top five in many other major cities.”

Further, the number of people it employs in architecture, interior design, engineering and related fields would make the co-working company one of the world’s biggest architectural firms. Its legions of landlords would hesitate to evict it in a downturn, as doing so could have a devastating impact on the commercial real estate sector. To allow WeWork to stay put, they would more likely renegotiate its leases or keep it on as a property manager.

Perhaps most significantly, WeWork has a towering ally in Softbank, which has lately talked of taking a majority stake in the company. With SoftBank and its $100 billion Vision Fund behind it, WeWork may have all the cushioning it needs.

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