The annual membership agreements come with a small discount to the regular leasing price and are available at four soon-to-be-open locations in Manhattan's Midtown and Soho, said spokesperson Dominic McMullan. The move is largely seen as a strategy for attracting bigger companies, which tend to look for longer leases.
"We are testing alternative versions of our membership agreements in four of our Manhattan buildings," McMullan said. "We continue to offer the same flexible, month-to-month membership agreements in these locations but we are also offering members the option to commit to a longer term agreement."
WeWork had secured investments of more than $400 million at a $16 billion valuation back in March. But just a month later the New York-based startup had to cut its 2016 profit forecast by 78 percent and disclosed a 63 percent surge in projected negative cash flow, according to an internal document published by Bloomberg last month.
It appears WeWork's romance with the startup community is going through a rough patch. Justin Zhen, co-founder of financial analysis startup Thinknum and former WeWork customer, wrote a Medium post suggesting that clients of the co-working space were canceling their memberships at an accelerated rate.
According to his analysis, WeWork's churn rate has historically remained at about 1.2 percent but Zhen's findings showed it had increased five times--to more than 6 percent--in recent months.
WeWork served Zhen with a cease-and-desist letter and terminated Thinknum's contract. Zhen's Medium post has since been deleted.
"This is not a change in policy or strategy," stressed McMullan. "It's not a reaction to things that are not working. It's [an experiment] to help us learn more about what attracts members to sign up for longer," he added.
According to WeWork, companies that rent 15 desks or more comprise 32 percent of its membership base. McMullan stated WeWork would continue to offer its month-to-month lease agreements.