As office landlords explore ways to compete with co-working spaces, WeWork is going the opposite direction. The shared office provider is going the traditional route, enlisting the help of real estate brokers to grow its tenant headcount.
The company has just revamped its relationship with real estate brokers, offering more compensation and more involvement through its new broker partnership program. According to Francis Lobo, WeWork’s chief revenue officer, his company is looking to expand its appeal beyond larval stage start-ups.
“There’s a whole group of customers that are represented by brokers,” he said. “But more importantly than that, we have a lot of people out there who think we have small start-up companies. That’s not the case. We have many large, enterprise customers already. Take for example Dell, GE, KPMG, Aflac and Visa. There are so many customers that are already with us. They have large offices, multiple offices, multiple buildings in multiple cities.”
To tap into the stream of real estate deals involving large corporations, WeWork is offering would-be go-betweens a richer bounty. Under the company’s previous referral program, ten percent broker commissions were capped at twelve months, with no compensation for expansion or renewals. Now, the company is giving brokers their twelve month commissions up front, with extra payments kicking in for leases that go beyond a year. Commissions are at two percent for up to 36 months. The payment structure is the same for lease expansions. Meanwhile, renewals are at two percent for up to 36 months.
The changes go beyond pay-outs. Brokers will take the lead in closing deals. WeWork also pledged to never directly contact clients with the permission of their emissaries.
“The fundamental key difference is, brokers are going to be involved throughout the process. When a broker comes to our new website and registers or gives us a lease, they are involved throughout the process. They can see what we do with the member. They can see whether we’ve signed the deed, whether we’ve sent the paperwork, whether we’ve signed the contract, so on and so forth,” Lobo said.
The program has gained the blessing of the city’s largest real estate firms. “Cushman & Wakefield are delighted to collaborate with WeWork in building new communities with culture and energy for the sharing economy,” said Bruce Mosler, Cushman & Wakefield’s chairman of global services.
The new program comes as the company, recently valued at $16 billion, grapples with weak financial prospects. According to a Bloomberg report earlier this month, the company reduced its 2016 profit forecast by 78 percent and its revenue estimate by 14 percent. The projections were based on delayed building openings and higher construction costs.