The issue pointed out by these two comments come from a conflation of vocabulary (which is typically intentional at least at some point in the education). A truly "free market" would ensure that things like WeWork wouldn't happen because the ultimate material inputs and outputs of the company don't square. "Capitalism" is the seeking of profit at the expense of all others, where having a viable company no longer is an objective in itself but simply is a means to increase personal wealth. In such a system, WeWork makes a lot of sense because the long term solvency of the company does not impact how the market measures it's success.

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what would be the correct/ideal way it would function in that regard?

This is the American version of capitalism working as intended.