WeWork's Survival Depends On Its Members. Its Bankruptcy Is Testing Their Loyalty

Anthony Holten signed up for a WeWork office in Astoria, Queens, in October, soon after moving into the neighborhood in hopes of getting out of the house and finding a community. 

Less than a month later, on Nov. 1, he received an email notifying him that his location would be closing in three weeks as part of what WeWork claimed was a regular review of its real estate portfolio, according to an email shared with Bisnow. He would be transferred to 430 Park Ave. in Midtown — a nearly 30-minute commute away.

Days later, WeWork filed for bankruptcy. 

“If I had known the Astoria WeWork would be shut down I would have gone with [a competitor],” Holten said. “Ultimately, if I can work remotely from anywhere, why would I go through the hassle of keeping up with WeWork’s changing communications as they restructure?”

As WeWork has scrambled throughout its bankruptcy to renegotiate and exit hundreds of leases, some of the members on whom the company depends have been left confused and frustrated in the whirlwind.

To paint a picture of how the embattled coworking pioneer's financial troubles have affected its customers, Bisnow reviewed court filings, financial statements, company correspondence and contracts, and spoke with current and former members and community managers, many of whom requested anonymity because they still have ties to WeWork. 

The company has had one of the the greatest rise-and-fall stories of the century — one documented in books, documentaries and even a TV show starring Jared Leto and Anne Hathaway as the company’s notoriously kooky co-founder and wife, Adam and Rebekah Neumann. 

WeWork’s office perks, along with its infamous “Summer Camp” music festival-like retreats, became representative of the entrepreneurial work-hard, play-hard mindset. The firm, which ballooned to 44M SF of office space and nearly 700,000 members worldwide by the end of 2022, became synonymous with coworking. 

But stories of Neumann smoking marijuana on the company's $60M private jet and other managerial concerns, coupled with billions in annual losses and a failed initial public offering, resulted in the CEO being exiled from the firm with a golden parachute. Its fall from grace, from a $47B valuation in 2019 as the world's most valuable startup to just $44.5M in market capitalization when it filed for bankruptcy Nov. 6, has been swift and dramatic. 

Its restructuring has allowed it to try to steady the ship and emerge a healthier business. Earlier this month, WeWork announced that the majority of its rightsizing has been completed, with the future of 90% of its global locations decided. 

In the U.S. and Canada, the firm has moved to assume 35 leases and reject 109, although a spokesperson said WeWork hopes to keep 13 buildings on the rejection list if landlords meet its terms. It must still take action on the other half of the 292 North American locations it had entering bankruptcy.

The spokesperson told Bisnow that a go-forward business plan will be released in the coming weeks. 

But any future WeWork profitability relies on keeping as many members as possible, despite shedding locations from its portfolio.

“Our member retention has been extremely high,” WeWork Chief Revenue Officer Benjamin Samuels said in an interview with Bisnow. “The vast majority of our members have stayed with us.”

WeWork declined to provide its retention rate but said that the company had its lowest membership churn rate in March since January 2023.

Still, it’s been difficult to convince some members to stay loyal to the headline-making coworking giant. WeWork’s revenue has dropped as office closures have mounted.

In January, WeWork earned almost $89M in revenue from membership and services, according to an SEC filing covering the U.S. and Canada portion of the business. The next month, that dropped to $83M.

“You have fewer buildings generating revenue. Of course, in absolute terms, revenue is going to come down,” Samuels said. “It would be impossible mathematically for it to go up in any other way.”

The company’s cash balance has dwindled. When it first filed for bankruptcy, WeWork had $168M on hand. By the end of February, its cash balance was less than $90M.

WeWork’s revenue could take more hits as contracts expire. The majority of members are locked into longer-term agreements, according to a 2022 annual report by the company. The total weighted full commitment length was about 19 months, with 70% of members having memberships for 12 months or longer.

Eight contracts reviewed by Bisnow show that WeWork requires members to give advance notice to terminate any contracts and forbids early terminations in some cases, whereas WeWork can terminate some membership agreements “at any other time, when WeWork, in its sole discretion, sees fit to do so.”

WeWork has made some initiatives for retention. The week after WeWork filed for bankruptcy, it celebrated “Member Gratitude Week,” offering free breakfast, fitness classes and a happy hour for members, according to an email shared with Bisnow and confirmed by Samuels.

Samuels said that the company has invested in events as well as sent members videos and answers to frequently asked questions to communicate the intricacies of the bankruptcy process. 

Member and manager experiences vary from location to location. One member, based in the Williamsburg, Brooklyn, WeWork, told Bisnow that he hasn't noticed a change since the bankruptcy and is happy with his experience.

Another, also based in New York City, said that she’s been anxiously watching the bankruptcy, with some fears about the closures, but hasn't noticed a change to her company’s membership. 

For Holten, the experience has been confusing.

Even after the Nov. 24 closure date of the Astoria office, it remained open and available for booking, according to a booking confirmation and photo of the interior of the office shared Nov. 27.

Holten canceled his membership in January, but it didn’t stop the coworking giant from sending him messages, including links to bankruptcy documents and emails on Jan. 22 and Jan. 29, seen by Bisnow, requesting that he re-add his payment information.

“It’s ridiculous that after canceling they made multiple attempts over email to make it seem like I had to sign back up and give them payment info,” said Holten, who, after sharing emails with Bisnow, made sure to double check that WeWork didn't charge him following cancellation of his membership.

Court filings also show that WeWork's facilities management staff expressed concern that its bankruptcy and failure to pay its vendors could affect the quality of its service.

WeWork previously partnered with Cushman & Wakefield to handle staffing for facilities maintenance and upkeep. In a motion filed Dec. 6, the brokerage stated it has approximately 200 employees that keep WeWork offices up and running, but WeWork failed to make pre-petition payments, including for payroll. 

In the filing, Cushman & Wakefield alleged that WeWork owed $5.5M and CAD $500K for services, along with another $2.5M and CAD $176K for payroll expenses. The document alleged that, at the time, at least 24 vendors had put their services on hold. 

“Many of the vendors have expressed grave concerns about receiving payment in full and some have already ceased performing any further services until they receive payment for pre-petition services,” Cushman & Wakefield's attorneys wrote in the filing.

In a March 25 filing, Cushman & Wakefield claimed that it had lost more than 10% of its dedicated WeWork staff, approximately 20 employees, since December. 

“The understaffing of Debtors’ account can lead to safety issues, a high-stress workplace, higher employee turnover, increased costs and an increased risk of accidents,” the filing said.

WeWork and Cushman & Wakefield came to an agreement April 10, with WeWork assuming its contract, paying $1.5M and owing another $1.5M “at later dates.” As part of the agreement, the company negotiated the cure amount to get WeWork current under the existing contract, a reduced management fee, increased flexibility in the contract and revised payment and operational terms, according to a filing.

Cushman & Wakefield declined to comment on its WeWork contract or the court filings.

Samuels declined comment on the Cushman & Wakefield contract but said that WeWork is “excited to be moving forward” with the real estate services provider. He added that WeWork has made hiring initiatives to meet demand.

Even before the bankruptcy, while WeWork's losses were piling up and its executives were trying to execute a dramatic turnaround, there were signs that the financial strain was starting to affect its locations.

In one Southern California office, members started to complain that the trash wasn’t being taken out when a nightly cleaning crew stopped showing up to the office, said a community manager who left WeWork months prior to the bankruptcy but continues to work in the hospitality industry. 

​​“As employees, we had an inkling that something was up because there were no raises, no bonuses, budgets were cut,” she said.

WeWork claimed that the practice was a “sustainability initiative” and brought the cleaning staff back following complaints, the employee said. But other vendors stopped services.

Shred-it, a company that securely picks up and shreds sensitive documents, stopped picking up papers left by members to get rid of. Similar issues arose with electricians, food and beverage providers and even the business Amazon account, the community manager said. Shred-it declined to comment. 

“It was really, really embarrassing when we didn't know we weren't paying our vendors, so we would find out when our vendors would cut their services,” the manager said. “That was not being communicated to our community managers, and then they would butt heads with our facilities managers.”

Samuels said that he was unaware of any internal tension among employees surrounding the company's attempts to mitigate its losses.

“We've tried to work in a really thoughtful way with all of our commercial partners, whether that be landlords, or our debt holders or our vendors,” Samuels said. “We want to build really meaningful relationships because our goal is to be here for the long term.”

It’s not just the community managers or vendors that can become upset by such cuts. After all, when a workspace famous for having kombucha on tap and milk-and-cookie happy hours loses that high-quality hospitality touch, some members may start questioning their loyalty.

Turnkey office provider Codi CEO Christelle Rohaut said that since August, she’s seen an influx of former WeWork members sign up. That increases as locations notify members of closures, she added. Codi offers a 25% discount to former WeWork members.

“The quality of the experience decreased pretty significantly. Because, as they shut down buildings, they relocate [members] to other buildings that maybe were profitable, but then they pack in as many members as possible,” Rohaut said. “I’ve seen bigger companies not trusting WeWork with their space anymore because, who knows, right? They can shut down their building next month.” 

However, in South Florida, which WeWork has said it is committed to for the long-term, Quest Workspaces CEO Laura Kozelouzek said that she hasn't seen an exodus of WeWork customers. Kozelouzek was a regional vice president at Regus when it underwent bankruptcy in 2003. 

“As a client, if you’re at a location that’s going to be closed, then of course it’s going to affect you in a big way. If not, there could be some changes to the services that were offered,” she said. “That’s what I experienced, there was some cost-cutting, and it was a little bit more difficult to manage through in terms of keeping the client in mind first.”

“For WeWork, in my opinion, they seem to be managing through it fairly well.”

WeWork’s Samuels said that the company has worked with members to make transfers comfortable. Additionally, for companies with large footprints that are difficult to accommodate, WeWork has connected them with landlords directly.

“I am not surprised that within the context of moving thousands of thousands of members, there are going to be some people who feel very dislocated,” Samuels said. “Everyone's going to interpret that differently and experience that differently. We did our best to make it as smooth as possible.”

A UK-based company was forced to transfer WeWork locations in Boston after one of its leases was rejected, one of the company's members told Bisnow. After being notified Jan. 8, the company had to be out by Jan. 25. WeWork paid for movers to assist with the move, but that didn't give the company much reassurance.

“They’re sending a message that there’s no stability here, so it makes us want to look elsewhere,” a member said. “One of the main reasons we were sticking with WeWork and not going elsewhere is because we were moving on their dime.”

Now, the member’s company is in a busier location and she said she is often fielding complaints from employees about the lack of meeting space and phone booths. She said she’s researching alternatives.

Many WeWork members have similarly flocked to social media to complain, as well as share discount codes. Multiple members have posted photos of signs and emails announcing their location will no longer be available 24/7, which was a draw for some all-access members.

“It didn’t leave the best taste in our mouths. It’s like, OK, I have trust issues now,” the Boston member said. “There’s a lack of resources and we pay a ridiculous amount of money for this place.”

“I just feel like they’re trying to build on this swamp and it’s sinking,” she added.