The head of iQ Offices, an independent coworking company in Canada, said WeWork deserves credit for popularizing flexible working.
Kane Willmott, co-founder and CEO of iQ Offices, which has eight locations across Canada spanning about 250,000 square feet in Vancouver, Ottawa, Montreal and Toronto, said companies like his have benefited from WeWork's effect on the industry.
"We were lucky from a time perspective because WeWork came in and got all those huge names and companies to adopt coworking," said Willmott, whose company was founded in 2012.
WeWork was founded two years earlier in New York and went public in 2021. The money-losing flexible office space provider recently announced plans to exit underperforming locations across the globe to try to solve its financial challenges.
Willmott said WeWork in Canada has done very well in finding demand for its locations that are close to transit and density. But large spaces by square foot like the ones WeWork has can be more challenging during periods of scarcity, and so can big rent deals, Willmott said.
"Ultimately, you are matching revenue to ongoing expenses," he said. WeWork's plan to renegotiate some of its leases with landlords "is very positive in respect of continuity" of WeWork's business, Willmott said. "There will be pain on both sides, but the result will be a sustainable model that is profitable in the long run. This needed to happen."
Willmott's comments come as Toronto hosted the Global Coworking Unconference Community this month that featured a fireside chat with Wayne Berger, CEO of the Americas for coworking giant IWG. The GCUC, which touts itself as the world's largest coworking conference series, has been holding coworking conferences since 2012 and got its start during a panel that featured WeWork co-founder and former CEO Adam Neumann at SXSW in Austin, Texas, according to GCUC's website.
Future of Flex
If some of WeWork's space becomes available in Canada, it will only move the needle a little since overall coworking space represents a small percentage of total office inventory, Willmott said.
"Even if WeWork handed back all their space, which they are not going to do, it just wouldn't be a huge impact on coworking," Willmott said.
WeWork declined to directly comment for this article.
The national office vacancy rate in Canada stood at 18.1% in the second quarter, the highest since 1994, according to CBRE.
Willmott said there are four pillars to running a successful coworking operation and it starts with knowing business is attracted locally.
"It's always the local people around the physical location who will occupy it," he said. "The second thing is having a good deal structure that matches the economics the location can attract. The third is running the location, and the fourth is building out what the customer needs and wants."
As for coworking, he believes the popularity of flex office space is only just beginning.
Willmott co-founded iQ Offices because "office leasing was being transacted in the same way as when I started" in the real estate industry in 1998, he said. "It was just so inefficient. And transacting office space was one of the least customer-centric processes" he was aware of. "I just thought this industry should be disrupted."