Workspace CEO: Wework’s demise will ‘benefit’ us
The chief executive of Workspace told CityAM rival Wework’s bankruptcy will “definitely give the company some benefit” as it begins to regain the crown as London’s leading flexible workspace provider.
Earlier this month, Wework, London’s biggest tenant, filed for Chapter 11 bankruptcy, leaving many questioning the health of flexible office space in the age of home working.
The firm, which was once seen as the poster child for modern working, had been battling with its debt pile and long office leases, and earlier this year flagged ongoing concerns and worries to investors.
The company’s downfall had prompted concerns about the state of London’s office market and demand for flexible office space.
But Graham Clemett, chief executive officer of the 35 year old Workspace, has said that demand for its properties is still prevalent in London and the wider South East.
The business, which manages four million square feet of office space across London, said net rental income grew nine per cent to £61m for the half year to 30 September 2023.
Workspace completed 583 lettings during the half year, with occupancy levels remaining largely unchanged at 88.7 per cent, down slightly 89.2 per cent last year.
The frontman for the firm explained his business tends to cater for smaller companies and also those in the fashion and production industries.
This means a lot of the time they require a physical space to carry out their job unlike the typical office worker who would have used a Wework.
Clemett told CityAM he believes the American office provider has struggled for a number of reasons.
He said: “Just in terms of their [Wework’s] model..they don’t own their buildings, we own all our buildings, they lease out. They had expensive leases, and they couldn’t really offset that with the income they could make off their customers.”
“The demise of Wework will give us some benefit because their customers will move into our space later on.”
The chief, however, did say that the firm would not be interested in buying Wework office space if it did go bust.
He said: “We have got lots of opportunities to be honest with an existing portfolio. We don’t need to take on extra space with Wework. I think it’s more around the customers than it is around the real estate for us.”
A Wework spokesperson told City A.M: “The UK and Ireland is, and always will be, one of our most important markets, and we are fully committed to providing our members with best-in-class, flexible workspace solutions for the long term.
“Wework’s locations outside of the U.S. and Canada are not part of the strategic reorganization process we began on November 6. We continue to work collaboratively with our landlord partners on solutions that set all parties up for sustainable success.”