The New Economics of Real Estate

Justin Segal John Wilson Jeff Johnson John GallanderBoxer Property Paladin Capital Group LiquidSpace Equity Commonwealth

How is WeWork valued at $10 billion?

What did they do to get to this?

Numbers to Consider

• 2014 Regus acquires Evans Easyspace, then sells to Bridges Ventures for £84m ($134M)

• 2014 WeWork raises $355M from JP Morgan & VCs at $5B valuation

• 2015 Regus acquires Abby Executive Suites • 2015 WeWork raises $400M from Fidelity @ $10B valuation

From GWA 2015 Financial Study

• Best performance is in fastest growing: Coworking• “Coworking spaces are experiencing explosive growth.”• There are now more coworking units than business centers being

built in North America• Search for word “disruptive”: “no results found”

Interesting Trend

• Six metro areas own 80% of US flex supply space*

• The same six regions enjoy 78% of US venture funding*

*CBRE Research Report: Americas Office 7.22.2015

For Startups, Not Just Space

How is WeWork Valued at $10 Billion?

•Addressable Market•Beyond the Current Product Set•Business Performance and Credibility•Technology Network Play

Addressable Market…

• 34% of US workers (50m) work independently, 60% by 2020. • 20% of independent workers (10m) are millennial. • “Corporate Workplace Services” target the much larger market of

(40m) corporate mobile and independent workers ages 30-55.

Beyond the Current Product Set…• One such product extension, as

has been noted in media reports, is their ongoing investment in “WeLive” micro apartments serving the urbanized, millennial customer base.

• We Live Crystal City DC and 110 wall street - this year...October and November...

Business Performance• Location liquidity - Pre-sold before opening in most locations• Predictable pipeline of new locations • Rising per member revenue• Supportive community, curated services, space when you need it…

• Productivity - Conference rooms, Telephone, Printing• Wellness - TriNet, Momofuku, Fitist• Efficiency - General Assembly, Mycheck, Axiom• Growth - Ink, Shopify, Amazon Webservices

• Partnerships driving a rise in service revenue• Membership beyond space - Accelerated growth of total members e.g. both

Commons members and Space members

Technology Networks• Network Orchestrators - These companies create a network of peers

in which the participants interact and share in the value creation. • They may sell products or services, build relationships, share advice, give

reviews, collaborate, co-create and more. • Examples include eBay, Red Hat, and Visa, Uber, Tripadvisor, Airbnb…30-40X

as a technology network.

For traditional business centers that don’t see themselves as community based, collaborator incubators, how can they leverage their relationship with their landlord?

TRADITIONALLANDLORD

WORKSPACEOPERATOR FLEXIBILITY &

CREDITBASIC

SERVICES

INTERPLAY &OPPORTUNITY

TRADITIONALSPACE NEEDS

SPACE SERVICE

[ NULL ]

SOPHISTICATEDSERVICES

[SOMETHING]

LEASE SOMEHOW

DYNAMIC DESIRES

“NEEDY”

“WANTY”

DATA

CONTENT DELIVERY

FRONT-END

PRODUCTS

FULFILLMENT

CUSTOMERS

ON SITE STAFF

PROGRAMMING

SUPPORT SERVICES

CONNECTIVITY

SPACE

MEMBER INFO

OFFERS

PROMOTION

PURCHASING

BUSINESS SERVICES

EDUCATION

NETWORKING

ART INSTALLATIONS

CUSTOMER EVENTS

TELEPHONY

INTERNET

WIFI MANAGEMENT

TECHNOLOGY

SWING SPACE

MEETING SPACE

CAFE / CASUAL SPACE

PARTY SPACE

SPECIALTY SPACE

EVENT PLANNING

CONCIERGE

COMMUNITY MANAGEMENT

CUSTOMER RELATIONS

COMMUNCATIONS

CUSTOMER INSIGHTS

VIRTUAL OFFICE

Questions ???