With the backing of billions of dollars from SoftBank’s Vision Fund , WeWork is spending huge sums in the hope that such demand materializes and that it will dominate the market. Its growth has made it the largest private tenant in Manhattan office space, according to data from Cushman & Wakefield, a real estate services company.

What Could Go Wrong

WeWork could find itself in a financial squeeze if it can’t find enough customers to fill its spaces. First, it has to make back the enormous sums it spends on sprucing up the spaces it leases from landlords. In the first six months of this year, WeWork had revenue of $1.54 billion but an operating loss of $1.37 billion, twice the loss in the comparable period in 2018.

Fitch Ratings slashed WeWork’s credit rating this month in part because higher expenses may postpone the company’s transition to producing cash rather than consuming it. “We still see the viability of the business model, but this does open it up to greater risk,” said Kevin McNeil, the Fitch analyst covering WeWork.

Perhaps the biggest danger hanging over WeWork is the big difference between the average length of the leases it enters into (roughly 15 years in the United States) and the time its customers typically agree to use the space (less than two years). The mismatch may not matter in good times, but in a recession — or in the face of increased competition — a significant number of customers could leave when their agreements expire, depriving WeWork of revenue it may need for its lease payments. The company’s ability to weather such a storm depends in part on how well its locations are doing right now.