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When Adam Neumann launched Flow, his residential real-estate venture, a little over three years ago, a lot of people were skeptical. The man who had run WeWork into the ground in spectacular fashion was launching another vague, vibe-y real-estate start-up? And people were once again throwing money at him to do it? Like WeWork, Flow seemed overvalued — it had a $1 billion valuation right off the bat, thanks in part to $350 million from Andreessen Horowitz’s a16z venture-capital firm, the largest single investment the firm had made at that point. “If a start-up is worth $1b before it launches a product it’s probably a scam,” Jason Calacanis, a podcaster and angel investor, tweeted at the time.
Since then, the details surrounding Flow have remained mysterious. But money keeps coming in. Bloomberg recently reported that Neumann has raised an additional $100 million, including more money from a16z, which more than doubled its valuation to $2.5 billion, and is planning an IPO. To anyone in the multifamily business, it’s more than a little baffling: Flow has a portfolio of about 4,000 luxury rentals in several southeastern cities — sizable for a regional company but hardly huge. (Preferred Apartment Communities, which was acquired by Blackstone in 2022, has 12,000 in the region.) And in terms of new developments, it has just one currently under construction: a 466-unit rental/condo tower in Miami. It also just sold its financially troubled Nashville development at a loss. Besides trendy interiors, intangible tag words like community and well–being, and a tote bag that reads “Holy Shit I’m Alive,” it’s unclear what Flow is offering that other luxury landlords aren’t. So why do people keep throwing money at it?
After the pandemic and his disgraced but lucrative exit from WeWork, Neumann bought majority stakes in a portfolio of 4,000 rental units in Atlanta, Fort Lauderdale, Miami, and Nashville to be owned and operated by Flow. The Wall Street Journal reported that Neumann, who left WeWork a multibillionaire after being forced out as CEO, was investing his own money this time around. It seemed as if Neumann had learned one thing from his previous run: Unlike WeWork, which was built around subleasing and managing office space it didn’t own, Flow would own the properties it managed, a more stable business model. Otherwise, it shared many similarities. Flow properties, like WeWork’s, would also have lots of perks, services, and cool branding bundled in, things that would, theoretically, help it stand out and appear innovative in a crowded industry.
Neumann has since partnered with other developers to build projects that are in various stages of completion: Flow House, a 466-unit condo in Miami Worldcenter that’s expected to open later this year (there’s also a Flow Miami rental nearby), and a three-tower mixed-use office and residential complex in Aventura with Israeli firm Canada Global. In addition, Flow is partnering with Canada Global to redevelop a 16-acre trailer park in El Portal into a mixed-use project with 2,380 apartments. The company also has some properties in Saudi Arabia, according to its website.
When Neumann launched Flow in the summer of 2022, he claimed the company would revolutionize the housing industry by creating community, fostering well-being, and, in the words of Horowitz, transforming renting an apartment from “a soulless experience” into, well, something less soulless.
According to its website, Flow creates “communities designed to connect you with your neighbors, yourself, and the natural world.” By providing an “elevated experience” and a “community” to tenants, Neumann explained at a conference, they would feel like they were “part of something.”
In reality, this seems to shake out to something along the lines of WeWork but for housing: apartments with more flexible lease terms (short- and long-term rentals), an option to rent a furnished unit, appealing branding, and a more robust slate of community events and programming. While there were early suggestions of using crypto wallets for payments, rent-to-own models, and tech enhancements (for instance, there’s a Flow app that one executive referred to as the “lubricant” of its Las Olas building in Fort Lauderdale, although online systems are fairly standard in luxury rentals), so far the innovation has been limited. It essentially seems focused on improving management and tenant experience. When Business Insider visited Society Las Olas, residents reported that the building was cleaner than it had been under the previous management, with five staff members in the lobby (or “residents lounge” as Flow rebranded it) versus a single concierge, new gym equipment, and a less clunky building app. There’s also a new poolside restaurant.
From a business perspective, this all seems to be in service of reducing turnover — expensive for both landlords and tenants. Do residents feel a greater sense of connection in a well-run building? Probably, at least in the sense of not counting down the days until their lease is up. But Neumann has suggested it fosters a more fundamental sense of ownership. As he said at a conference in 2023: “If you’re in an apartment building and you’re a renter and your toilet gets clogged, you call the super. If you’re in your own apartment and you bought it and you own it and your toilet gets clogged, you take the plunger.” (Presumably, the lines blur in a Flow building; a Flow renter would take up their own plunger, and a Flow owner would call the super because they wouldn’t feel alone in the process.)
Despite what happened at WeWork, a number of people I spoke with pointed out that Neumann is really good at convincing people to buy into his vision and give him money. “He knows how to create a fun atmosphere and understands the vibe between art and real estate,” says a multifamily developer. He is, in other words, really good at branding. And maybe the stodgy image of a luxury-apartment landlord could use some rebranding?
A business based on multifamily housing is also a lot less volatile than one built on subleasing office space à la WeWork, as the office market crash and WeWork’s subsequent bankruptcy illustrated. When the value of office space plummeted, WeWork was locked into expensive leases it had to either renegotiate or lose money on. Multifamily housing, on the other hand, is far more stable. Even if rents stagnate, the country has a major housing shortage, and demand is going to remain high.
While no one I spoke with expected Flow to do anything revolutionary, the developer pointed out that Neumann might very well pull a Compass — raise tons of capital by promising revolution and cutting-edge tech. And by the time it’s clear that the revolutionary stuff isn’t going to pan out, it has become a huge, albeit largely traditional, player in the industry.
“If you’re an investment company, part of what makes you successful is the ability to raise money,” says the developer. “I think he has a decent chance of succeeding. I think he also has a decent chance of believing his hype and chasing windmills.”
Neumann continues to make deals with new partners and investors, most recently the deals in Aventura and El Portal with Canada Global. But he’s also lost one property and a majority stake in another: Flow just sold its financially troubled 358-unit Nashville property to Tishman Speyer for less than it paid. (The property lost $3.7 million in 2022 and $3.6 million in 2023 due to rental concessions and capital costs; Flow told Business Insider it had never managed the property and was a minority owner.) Flow is also reportedly selling a stake in the company’s Buckhead, Atlanta, property, rumored to be distressed, to another multifamily landlord. To be fair, a lot of rental properties in the Southeast have experienced similar problems. A finance researcher I spoke with explained that the Sunbelt rental markets saw huge rent increases after COVID, were subsequently flooded with too many new units coming online, and are now seeing rents fall.
As for the near future, Bloomberg reported that, according to its executives, Flow would be cash-flow positive sometime this year. In other words, it’s still losing money.