The big story in commercial real estate is the announcement that WeWork is starting a real estate advisory service. Starting with a small pilot program in Manhattan, now they will be able to find locations for companies that are not a good fit for their co-working service. Even though the team is relatively small it has turned heads throughout the industry because of WeWork’s strong brand and cash reserves.
WeWork has long had a tenant referral program that pays brokers who place their clients at a WeWork location. This might be one of the first things to suffer as there is sure to be a backlash from the brokerage community. Plus, most have a legitimate fear that any client that is placed their might not leave the WeWork ecosystem. Who knows how many of the companies that outgrew the co-working option asked WeWork if they could find them a fitting office? Now they will be able to generate some revenue from those established relationships and keep clients in their ecosystem in case they want to keep a portion of their team in a co-working setup like Verizon, IBM and Microsoft have been experimenting with.
What WeWork has done better than any other company is to become synonymous with innovation. Unlike many real estate firms, they have captured the hearts and minds of the business community. I don’t go a week without hearing someone talk or write about a “WeWork style office” and we all know exactly what that is. Plus, WeWork has always sold themselves being valued for not only their real estate, but for the innovation happening inside of it. The head of global real estate at Verizon, even though they are working with the co-working company Alley rather than WeWork, said this about his reasoning for wanting some of their team to be in a co-working location: “To us, the real value is what we get by bringing entrepreneurs into the building and having them meet our folks […] We realize that things will be invented outside of Verizon and we want to be a part of that.”
Now they look to use their hard-fought front of mind position as the most innovative office designer/manager to create leads for what could become one of the most well-positioned office brokers basically overnight. Amazon, Google, Apple; all major tech companies try to expand their business into ancillary services that can increase existing customer spend by reducing friction. It looks like WeWork’s philosophy is no different. They will be in a position to monetize even further anyone that steps into their doors. The only difference is now they should not expect to see many people pointed their by a commercial real estate broker.