Ben Brown, managing partner in Brookfield’s real estate group, has warned investors to take a more prudent approach to investing in flexible office space companies in light of troubles at WeWork, which has cancelled a listing and seen its senior leadership overhauled during an emergency fund raising from SoftBank.
Asked in an exclusive interview with EG if the WeWork saga will see investors adopting a more cautious investment strategy when looking at the flexible office sector, Brown said: “I think it should. I don’t know if it will, but it should.”
Since the conception of the $100bn SoftBank Vision Fund in 2016, the Japanese conglomerate has pumped nearly $10bn into WeWork.
That figure does not include the $9.5bn funding package SoftBank struck in October with the struggling coworking giant, which will see the investor take an 80% stake in the company.
Brown noted that similar heavy investments have been made in other businesses, such as Uber, and that “time will tell whether some imprudence has been in other sectors as well”.
Speaking generally about the flexible office market, Brown said there had been “an exuberance of enthusiasm” for businesses providing such space, but that valuations of companies based on their growth projections have now been “muted” in light of WeWork’s problems.
Nonetheless, he said flexible offices are now a fixture of the workplace market and that Brookfield is looking at how to provide for this demand.
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