WeWork Members Unite in Slamming Coworking Firm on Fees
WeWork members have launched petitions and online campaigns to call on WeWork to shutter locations and stop collecting fees. Others are considering filing a class-action lawsuit.
For years, coworking giant WeWork pitched itself to small businesses as not simply a space to work outside of your home, but as a way to join a community of like-minded companies. Now, that very same community has started to turn against WeWork over frustrations with how the firm has navigated the coronavirus pandemic.
WeWork members across the world have banded together to start petitions, online websites and YouTube videos calling on the coworking behemoth to stop collecting membership fees while companies aren’t using their offices and close all its locations to stop putting its workers at risk. Some WeWork members told Commercial Observer that other tenants have consulted with lawyers and are considering filing a class-action lawsuit against WeWork over the collection of fees.
“They did provide a good service, but now that we’re here in coronavirus all this rhetoric that, ‘We’re a community and we’re here to help businesses thrive,’ goes out the window,” said Ray Miller, who runs management production company Archetype out of a Los Angeles WeWork. “They’re acting like a company that doesn’t have a long-term plan and it’s just kind of a cash grab.”
Last week, WeWork members started a “wehaveaproblem” campaign with a YouTube video of several members pleading with WeWork to shut down their locations and stop charging membership fees.
Members also launched the WeFeedBack website and petition collecting stories from WeWork tenants over WeWork’s aggressive collection methods during COVID-19 along with a tally of how much they’ve been charged. So far the total is more than $521,006 for 545 unused desks and the WeFeedBack petition has garnered nearly 400 signatures as of today.
“I saw a growing trend of people getting helpless, they couldn’t get a response from WeWork, they couldn’t get any clarity,” said a WeWork member named Derek — who did not want his last name used for fear of reprisal — who lives in Singapore and started the WeFeedBack website. “I started the petition to get a response from the community and a sense on what the number of affected people is.”
Many WeWork businesses, which can range from small real estate companies to tech start-ups and non-profits, saw their business dry up overnight as emergency measures to stop the coronavirus halted much of the economy. They fear the fees charged by WeWork during this time could be a death knell for their company.
Membership fees vary from location to location, but a WeWork in Soho charges $1,060 a month for a single-person private office to $840 for a dedicated desk while one in Long Island City, Queens charges $820 a month for a single-person private office to $310 for a hot desk, according to its website.
“WeWork was built to support and foster small businesses and entrepreneurs who are already working with extremely thin margins,” said Allison Hayhurst, who runs a film and theater production company Evening Squire Productions out of a WeWork in Long Island City. “Continuing to charge membership fees feels like it’s going against not only the businesses that helped build WeWork to what it is today but [WeWork’s] mission.”
It’s not just the fact WeWork is charging fees that left a bad taste in members’ mouths, but the way they did it. Members told CO that WeWork sent demanding emails, charged a 10 percent late fee for missed payments and took money out of their account in the middle of negotiating deferrals, forcing them to fight to get the money back. Others said WeWork offered to work with them on the fees, but urged them not to tell other members about the deals.
“They just turned into fucking Vinnie from the Mafia,” Miller said. “They just really let us down as tenants and they had opportunities to look like fucking heroes.”
A spokesman for WeWork declined to comment.
While members have complained about WeWork’s aggressive collection tactics, WeWork still has to pay its landlords and the coworking company isn’t alone in demanding tenants pay up even while offices across the country are empty.
Traditional landlords in New York City asked tenants — including WeWork — to continue to pay up during the coronavirus. Jeff Gural, the co-CEO of GFP Properties, previously told CO that while he was willing to work with office tenants if they needed help during this time, landlords are still on the hook to pay property taxes and cleaning crews so expected most to pay some rent.
“I can’t cut the costs that I’m obligated to pay, it’s really unfair that I have to pay,” Gural previously told CO. “It’s very shocking how many people think they can walk away from those responsibilities.”
However, the Wall Street Journal reported that WeWork skipped out on many of its rent payments in April — with one landlord previously telling CO he didn’t even receive a notice from WeWork — and has been working to negotiate its leases to cut down its rent. The discontent brewing among WeWork members hit a fever pitch after it came out WeWork didn’t pay some of its rent.
“It’s another slap in the face,” said Mike Hayhurst, who runs Evening Squire Productions with his wife Allison Hayhurst. “There’s one rule for the big guys and one rule for everybody else.”
Another argument WeWork members make about not needing to pay fees is how WeWork frames their monthly agreements. The company calls the deals membership agreements which some likened closer to gym memberships — which have already been hit with class-action lawsuits for collecting the fees even though gyms have been closed — than a traditional office lease.
Some WeWork members posit the only reason the coworking giant keeps all of its locations open is to be able to charge the fees and avoid a lawsuit itself.
“The idea is to create the impression that they’re still providing member services and that members are simply not accessing them,” Miller said.
And even when WeWork has worked with members it hasn’t been extremely helpful to some. Evening Squire Productions was offered a rent deferral for April that would need to be paid back when its membership agreement runs out.
The problem is the Hayhursts’ agreement runs out at the end of July, leaving them with either a crippling bill or to be forced to extend their agreement to delay paying.
“For us, when the New York PAUSE is lifted it’s not like we switch on a light switch and our business goes back to 100 percent, it’s not like it’s going to go back to 150 percent overnight,” Mike Hayhurst said. “My trust in them and my faith in them has pretty much been shattered.”
Members started to join together on platforms like Slack and Telegram to share their experiences dealing with WeWork. Derek, who’s been forced to pay his April and May WeWork membership, said he collected responses on his website to help show non-WeWork members how widespread the issue is.
“I think it’s very helpful for [WeWork members] to get some media attention and also get some government understanding of how much you can impact many members,” Derek said. “They’re just taking it as a case-by-case basis.”
The New York State Attorney General has received about a dozen complaints about WeWork during this time and it’s unclear if they have led to any investigations into WeWork, Pix 11 reported.
WeWork was already bracing for a tough year after its disastrous 2019 that started with its botched initial public offering that shined a light on its money-burning business model that left some investors wary. Since then, WeWork parted ways with its bombastic co-founder and CEO Adam Neumann, saw its eye-popping $47 billion valuation shrunk down to less than $5 billion, laid off thousands of workers and needed a bailout from major investor SoftBank Group to avoid running out of cash.
Things started to look better for WeWork’s fortunes after it named real estate legend Sandeep Mathrani — a key figure in pulling mall owner GGP out of one of the largest bankruptcies in real estate history — as the new CEO, who then recruited experienced real estate executives to its C-suite. But then the coronavirus pandemic forced most companies to work remotely to avoid the spread of the disease in cramped offices.
WeWork’s occupancy rate fell to roughly 64 percent at the start of April as thousands of its members refused to pay rent or tried to terminate their leases, the Financial Times reported.
But almost immediately after local governments put emergency measures in place forcing companies to work-from-home, members criticized WeWork for keeping them open, even after finding confirmed COVID-19 cases in some.
“They are putting all the members’ lives at risk while trying to keep their employees safe at home just to continue to profit off many small business owners,” a WeWork member for more than two years, who had a confirmed coronavirus case in her Manhattan WeWork, previously told CO.
WeWork publicly said that it can and chose to keep its locations open because it’s considered an essential business that also provides space to other essential companies.
“It’s possible that there are greater than zero members in the United States or worldwide that really do operate actually essential businesses,” said Jill Raney, who runs the consultancy Practice Makes Progress out of a Washington, D.C., WeWork. “If that were true WeWork would only need to keep open the spaces where those essential businesses operate.”
Raney launched a petition in March calling on WeWork to close all of its locations, which has garnered close to 800 signatures. Aside from putting a burden on struggling small businesses with the membership fees, Raney said a big reason to launch the petition was the safety of WeWork’s workers (who WeWork has offered a $100 a day bonus to show up to work).
Raney was on a month-to-month agreement so simply canceled their WeWork space this month. When going to clean out the office, Raney saw cleaning staff without gloves or masks — while the cold brew taps were still on.
“You’d absolutely need full protective equipment in order to clean a space that has to be open right now,” Raney said. “It’s absolutely insulting and completely callous.”
Experts previously told CO that if WeWork can weather the coronavirus pandemic, they’d be in a better place to survive because flexible leases will become extremely important to office tenants in the future. However, WeWork might lose a good chunk of its current members in the process.
“The majority of people who have had this experience, it’s pretty much a standard point of view that they don’t want to go back to a WeWork,” Miller said. “For a company that relies on its brand, I don’t know how they come out of this not hobbled.”
Raney, Miller and Hayhurst all said they didn’t plan to resign their membership agreement with WeWork because of how it handled fee collection during this time.
“How you deal with this pandemic affects your long-term brand loyalty,” Allison Hayhurst said. “It makes me very sad because I was drinking the WeWork Kool-Aid and was a very strong advocate for the opportunities they provided and the space we really loved. In a matter of months, that has gone out of the window.”