WeWork Did What?!

WeWork is in bankruptcy. Adam Neumann wanted to buy the company back. But the company's lenders rejected his offer and went with a different plan. Meanwhile, another "White Knight" swooped to save the company with a $450 million restructuring plan. The savior was Yardi Systems, a software company most people never heard of.

Yardi is a privately owned company best known for its property management and accounting software. Its main clients are large operators of residential buildings. However, in the past few years, the company has developed a growing appetite for the office market. Where others see a crisis, Yardi sees an opportunity—and for good reasons.

Office vacancy is high. Tenants are ending their leases or taking up less space. The offices that are still leased are utilized at historically low rates, with employees coming in only for a few days or hours a week. Office demand is reshuffled across many new locations—closer to people's homes or in whole towns and regions that were previously off the corporate grid.

The office is being reinvented. As I once wrote, "The office of the future is not a place; it is a network that allows the individual to access a variety of locations that enable the task at hand."

In a world of networked offices, software's role becomes critical. Booking spaces, predicting demand, managing access to different locations, billing tenants for tiny transactions based on usage, collecting data to guide managers, streamlining usage of properties owned and operated by different companies — there are dozens of tasks that need to be handled; each is quite simple on its own, but together, they represent a major headache that someone needs to handle.

Landlords can't handle this headache because it's not really their business (some are now trying; most will fail, and a handful will make it). Traditional brokerages are also trying to pick up some of this "headache," with some success. Most software companies can't handle this headache because, well, it's a headache: Big and successful software firms probably have better things to focus on, and small real estate software firms are too small.

And then there's Yardi. Yardi is a software company with unparalleled experience in real estate; it has the know-how and understanding to deal with the headache. It's also a private company with lots of cash, which enables it to do things that traditional software companies cannot—such as rescuing WeWork out of bankruptcy.

So, what is the play?

Yardi wants to use WeWork's brand, client base, and network of spaces to become the go-to name in flexible offices. Every landlord, operator, and employer that needs a software solution to handle the "headache" would ideally be able to call Yardi and get things under control.

Yardi has already been helping WeWork improve/revamp its own software stack for the past couple of years. And it has already invested in smaller platforms and startups that cater to employees in search of a workspace or landlords who have to deal with flexible demand. Recent advances in artificial intelligence and machine learning open up many other use cases for software in real estate, which I'm sure Yardi is also thinking of.

Once upon a time, I wrote a book that predicted that one day, the office world would have its own Hilton and Marriott — consumer brands that partner with investors and owners to make buildings attractive and accessible. I always thought WeWork was the prime candidate for becoming that brand. In Yardi's hands, WeWork has a new opportunity to fulfill its destiny.

And even if it doesn't, Yardi will get lots of publicity, plenty of new leads, and position itself as a major player in the office world (it's already the player in residential software).

All I can say is Good luck!

What else is new?

I've been a bit of a hermit in recent months, focusing exclusively on the writing of my upcoming book — with occasional outings to give keynotes across the world. The book has become very different and much more fun than I originally envisioned. Hopefully, I'll be able to share more with you soon (and early supporters will get their special copies and acknowledgments).

What else?

• In June, I will speak at MIT's World Real Estate Forum about the future of work and cities. You can register here.
• Earlier this year, I chatted with Raoul Pal about investments, AI, crypto, cities, and my personal journey. You can see and hear the whole thing here (our chat begins around 9 minutes in).
• Other recent media mentions in The New York Times, NPR, and elsewhere are available here.
• If you haven't read it yet, check out December's 10 Predictions about Real Estate and AI.
• While the newsletter is in hibernation, you can always find me on Twitter for quick takes and occasionally on LinkedIn as well.

Thank you for reading.

Best,