co-working

Is WeWork’s Rebrand Just a Clever Way for It to Benefit From Its Own Halo Effect?

When it comes to real estate, nothing exists in a vacuum. Any decision that is made to any property directly affects the surrounding real estate. The real estate market is very location sensitive so any local changes to supply and demand sends ripples through the neighborhood. If a property sells for an “above market” price the market adjusts accordingly. If a tenant changes from an auto shop to a bookshop it changes the character of the block.

This means that building’s brand can’t stand alone. It is either propped up or undermined by the brand of the neighborhood. I was first tuned in to the idea of cities and neighborhoods having brands by Aaron Renn, senior fellow at the Manhattan Institute. He gave a great presentation at the MIPIM Proptech Paris last year about how cities need to think differently about their brands rather than just try and reiterate some version of San Francisco or New York. Here is an article with video about that very speech.

Not only are properties influenced by the image of their surrounding areas, they can also influence it by who they rent to. One of the tenants that is able to change the character of a neighborhood more than any other is WeWork. Their trendy co-working locations bring jobs to an area. In a blog from last year they claim that, “The vast majority of WeWork members are new to a neighborhood. Across New York City, Los Angeles, and Chicago, 70%-80% of members did not work in the neighborhood prior to joining WeWork.” They think that they are able to “break down barriers and provides access to space, services, and a community that is both locally tight-knit and globally extensive.”

While I don’t have hard evidence to back up their claims we all know this to be true anecdotally. Almost every city in the U.S. has had a WeWork change neighborhood. It is somewhat of a no-brainer to say that with good jobs come money. This money permeates into every aspect of an area from increased sales at stores and restaurants to an increase in demand in the housing market.

The real estate industry has known for some time that the areas around WeWork locations are likely to appreciate. Now, WeWork is looking to capture some of the value that its halo creates by incorporating other brands under its new name: The We Company. One of the initiatives that has created is “Made by We.” When they announced this new retail-focused push The We Company said, “Made by We will act as a new town square, revitalizing the neighborhood with a center of community where people can come together to work, grow, support mission-driven products and small businesses made by our members, and gather for events that help people build a life powered by connection and purpose. This new offering features a retail space that showcases products like snacks, apparel, travel, and workday goods created by members of the We community…”

My big takeaway for that quote is “a new town square.” Not having a central place for people to congregate is one of the biggest branding faux pas in the city planning. But it is something that many post-industrial cities are guilty of. Creating a space, near to where a lot of people work, for the neighborhood to hang out can further increase the brand of an area. Having it be part of The We Company offering drives up demand for their co-working locations and allows them to take advantage of the positive halo effects that they have already been shown to produce. Real estate decisions to not exist in a vacuum and The We Company seems keen to exploit that for the benefit of their brand and the brand of the cities that they are in.

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