As Wework’s troubles continue, the company’s competitors are taking advantage
Troubled Wework has continued to scale back its footprint in London following the bankruptcy of its parent company in the US.
Last week, the company, which is still the capital’s biggest commercial tenant served notice on a site in Finsbury Pavement, warning it would have to leave the building by the end of March, the Evening Standard reported.
There are now just 30 Wework sites advertised on the company website down from 35 available spaces last month after the company exited its Bishopsgate and Clerkenwell sites.
At its peak, the trendy workspace provider had 50 sites across London.
A Wework spokesperson told City A.M: “As part of WeWork’s efforts to achieve a sustainable capital structure and profitable business to serve our members for the long term, we have made the decision to stop operations at 131 Finsbury Pavement.
“We have offered affected members the option to relocate, with our support, to our other locations in London, and deeply apologize for any inconvenience this may cause. We look forward to continuing to provide our members with flexible space solutions across our other locations in the capital.”
Wework was once one of the fastest-growing businesses in the world, but it has been hit hard by the rise of home and hybrid working, which has reduced demand for office space.
The firm has also been battling a substantial debt pile for quite some time and it filed for Chapter 11 bankruptcy in the US last November.
Recently, rumours have surfaced suggesting its former founder, Adam Neumann was looking to buy the business five years after he was ousted.
Wework’s demise has raised concerns about the future of flexible working, but competitors have shown that demand for flexible workspaces remains strong, and Wework’s problems are largely of its own making.
Rival International Workspace Group (IWG), which owns the Regus and Spaces brands, said today it had delivered its highest-ever annual revenue in its 25-year history, up to £3.5bn, an eight per cent increase.
Mark Dixon, chief executive of IWG, said: “We enter 2024 continuing our momentum from 2023 as we continue to grow our customer base, our global partnerships and our best-in-class network.
“While 2023 was a record year for both revenue and network size, we continue to see significant growth potential.”
Speaking to CityAM, Mat Oakley, European director for commercial research at Savills, said it is not all doom and gloom in the commercial property market.
He explained: “It’s not a particularly bad time to have an unexpected void because the rents in the West End have been growing at about six per cent per annum since the beginning of Covid and four per cent per annum in the City.
“That kind of implies that there is an under supply of space,” he said. “There’s a lot of potential upside here the level of demand in the market is about 41 per cent higher than normal at the moment for office space in London.”
Rival firms also believe the gap Wework is leaving in the market offers a chance for opportunity.
The chief executive of Workspace previously told CityAM rival Wework’s bankruptcy would “definitely give the company some benefit”.
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.”