Real estate titans have long scoffed at WeWork, which in eight short years has managed to attain a $20 billion valuation by selling short-term leases for shared office space with a mixture of stylish design and free-flowing alcohol.

Derided by some as a real estate company masquerading as a technology company, it has been called everything from a “$20 billion house of cards” to a “Ponzi scheme.”

The naysayers argue that WeWork’s business model looks brilliant only in a rising economy that has allowed it to lock in long-term leases and then re-rent that space to other businesses at a premium. The enormous valuation it has obtained is higher than that of Boston Properties and Vornado, two of the country’s biggest office-space landlords — companies that actually own the kind of space that WeWork usually rents.

Now, with interest rates creeping higher, residential real estate prices flattening and fears of an economic slowdown coming, real estate insiders are gleeful at the notion that a downturn could be an existential threat for the company.

But a funny thing happened as WeWork has scaled up all over the globe: It may have become too big to fail.

WeWork has gobbled up leases for so much space in so many cities, there’s a compelling case to be made that its landlords wouldn’t be able to afford for it to go under.

Because of WeWork’s size, “they have more power in a down market,” said Thomas J. Barrack Jr., the longtime real estate investor and founder of Colony Capital.

The company is scheduled to release third-quarter financial results on Tuesday. A WeWork spokesman, citing the coming report, declined to comment.

The conventional wisdom is that when the economy turns south, WeWork’s customers — many of which are start-ups and may be the most vulnerable — will simply walk away. The flexibility of WeWork’s short-term leases is part of its appeal, after all.

Such a situation would leave the company stuck with long-term leases, few clients and little income. It’s the same one that faced Regus, an office sharing company that filed for bankruptcy protection after the dot-com bust. And even as WeWork has grown, it has burned through considerable cash: It lost more than $700 million in the first half of 2018.

Even those who are bullish on WeWork count changing economic conditions among the dangers it faces. “While the company’s flexible contracts may be ideal for small companies, WeWork would inevitably face trouble leasing their spaces if start-ups began to dry up or if the real estate market experiences a downturn similar to the 2008 financial crisis,” the research firm CB Insights wrote as it articulated the criticisms of WeWork in an otherwise upbeat case for the company’s sky-high valuation.

But WeWork has been building a more durable business than most real estate executives seem to appreciate. The company was once marketed to individuals and small businesses on month-to-month lease agreements, but large companies like IBM and Microsoft are now using it and signing significantly longer leases. The company says its average customer has a lease of seven to eight months and new customers are signing leases that average 20 months.

Underneath all the branding and wide-ranging aspirations — which include a for-profit elementary school called WeGrow — it’s still a real estate company.

“At the end of the day, it is about leasing space,” Mr. Barrack said. And WeWork has leased a lot of it.

The company has said it is the largest real estate tenant in New York, London and Washington. It ranks in the top five in many other major cities. In New York alone, WeWork controls three million square feet of commercial real estate; it controls 15.5 million square feet globally with 335 locations in 24 countries.

WeWork projects to have about 400,000 individuals using its office space by the end of the year, which would put it ahead of the entire employee base of Warren Buffett’s Berkshire Hathaway — one of the largest employers in the nation.

Another sign of just how large WeWork’s ecosystem has become: It employs 1,300 people in architecture, interior design, engineering and related activities — an employee roster that would make it one of the biggest architecture firms in the world.

That means when the next economic downturn comes — and it will — WeWork’s landlords will actually be less likely to evict the company if it doesn’t pay its rent. If they were to let WeWork fail, those landlords would risk depressing commercial real state prices to such a degree that it would create a serious sense of pain for the country’s largest real estate owners.

More likely, landlords would swallow hard and renegotiate the lease agreements on more favorable terms to keep WeWork from creating a full-on panic.

The idea of “too big to fail” has long applied to banks and whether the government would come to the rescue to prop them up, but in this case, landlords all over the world might find themselves in the uncomfortable position of having to help save a failing tenant simply because the tenant is so large.

That isn’t necessarily the only solution if WeWork were to end up unable to pay its rent.

Rather than kick out WeWork or lower its rent, a landlord could have the company act as a property manager. A big part of WeWork’s value proposition is in its management of properties. It’s possible that WeWork could become the equivalent of Marriott, which manages hotels but doesn’t own or lease them.

WeWork also has a cushion that most real estate companies don’t: SoftBank. The Japanese investor has already plowed $4.4 billion into the company and just last month discussed taking a majority stake. Given SoftBank’s deep pockets — it has a $100 billion fund aimed at start-ups — it is quite possible that WeWork could weather financial difficulties without any help from its landlords.

When the next downturn comes, we’ll find out who was right: real estate traditionalists, or the ones trying to upend them.

Andrew Ross Sorkin is a columnist and the founder and editor-at-large of DealBook. He is a co-anchor of CNBC’s Squawk Box and the author of “Too Big to Fail.” He is also the co-creator of the Showtime drama series Billions. @andrewrsorkin • Facebook

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