With Restructuring Behind It, WeWork Plots Next Chapter For 3M SF UK Portfolio

After rapid-fire growth and bankruptcy, the next phase in WeWork’s story is coming: the long, slow process of renovating office space, leasing it up and, if all goes well, making a profit. 

“Everything that we do today is in the effort of having a sustainable growth trajectory,” WeWork Regional President for UKI, EMEA and APAC Luke Armstrong told Bisnow, talking through the flexible office company’s strategy for the UK after emerging from Chapter 11 bankruptcy in the U.S. last June.

“In order to do that, we have to make sure that we deliver space which is right for the market.”

The UK subsidiary was separate from American bankruptcy proceedings but still exited 19 leases in London between September 2023 and April 2024. Its UK and Ireland portfolio now stands at 3M SF and 40 locations, 30 of them in London.

With a hacked-back portfolio, WeWork is now taking selected offices out of commission — reconfiguring some to cater to increasing demand from small and midsized businesses and renovating older offices in an attempt to drive up rents. 

Occupancy in the UK and Ireland stands at 70%, and the focus will be on driving that figure up, though the possibility of growing the portfolio is only likely where there is very clear demand from customers, Armstrong said. 

A quick recap: WeWork grew massively under the leadership of founder Adam Neumann, growth fuelled by tens of billions of dollars in investment from Japanese tech giant SoftBank. At its height, it had more than 850 locations worldwide and 700,000-plus members.

But that rapid growth came with huge lease liabilities, which peaked at $47B. The company incurred huge losses of as much as $4.4B in 2021. 

In 2019, WeWork tried to float as a public company at a $47B valuation, but markets balked, the IPO was pulled and Neumann was ousted.

New CEO Sandeep Mathrani cut back some locations and tried to set a course to profitability. Despite the detrimental impact of lockdowns on flexible office leasing levels, WeWork did go public via a special-purpose acquisition company deal at a $10B valuation in autumn 2021. 

But the losses kept on coming.

Running out of cash, with the repayment of $4B in bonds coming due, WeWork filed for bankruptcy in November 2023. After a long period of negotiating with landlords about rent cuts, it exited 170 locations around the world and now operates from about 600 sites in 37 countries. 

In a surprise move, software company Yardi took over WeWork as majority owner, paying $337M for a 60% stake in the company. Lenders own the rest of the company, taking an equity stake in exchange for wiping out the company’s $4B debt pile.

The company said it expected to make a small loss in 2024 but a $101M profit in 2025, with profit then rising to $343M by 2028.

Armstrong declined to comment on whether the UK and Ireland business is profitable. With the company now private and having no public debt, there is no way to check on its progress. 

“All I can say is we're debt-free, and it’s a phenomenally firm foundation for the future,” he said. 

According to data the company shared on the UK and Ireland, on-demand bookings grew 31% in 2024. 

Its top five locations in the UK and Ireland are Moor Place in the City of London, 10 York Road near Waterloo, 30 Churchill Place in Canary Wharf, 123 Buckingham Palace Road in Victoria and Central Plaza in Dublin. These locations saw a 38% year-over-year increase in WeWork On Demand bookings.

The company is still seeing demand from larger “enterprise” clients, including six requirements from large corporates looking for flex office space totalling 150K SF. But small and midsized businesses are proving a major driver of demand at the start of 2025, and WeWork is adjusting its portfolio accordingly, Armstrong said.

“We are spending quite a lot of capital on reinvesting in the portfolio,” Armstrong said. “So we've taken some of our space offline to reinvest in either refreshing it to bring it up to standard, or to do something we call ‘reskewing,’ which is taking some of our larger offices and redesigning them to become of purpose for a broader SMB audience, which is where we see a really strong level of demand.”

Though many larger organisations are still working out their return-to-office strategy, conversations with WeWork members indicate smaller companies have decided on a policy, he said. On the whole, they are more likely to be in the office for a greater part of the week. 

It is also reinvesting in its portfolio to increase pricing on desks and offices, particularly in its older buildings. As in the traditional office market, pricing has shown strong increases in the last year at its best and newest offices, but it has lagged in older buildings. 

“Recently in London, we invested meaningful capital into 16 Great Chapel Street in Soho, which we've repositioned and is now achieving rents and pricing beyond where they ever were,” Armstrong said. 

The overall flexible office market in the UK had a year of growth in 2024. Data from Workthere, Savills’ flex office division, showed that UK takeup in the sector was 1.1M SF in 2024, the highest level since 2019 and 12% above 2023 takeup. 

Despite the travails the company has experienced in the past five years, WeWork is placed to capitalise on continued growth in the flex sector, Armstrong said, arguing the brand has not been tarnished. 

“I can only speak to the members that we speak to within the broad community, and I think the brand has remained incredibly robust,” he said. “I still think we are agreed to be the category leader. I think we're a globally recognised brand, and that's stood up through the challenges.”

Armstrong said WeWork is differentiating itself in a highly competitive market by the scale it can still offer and its customer service, from the teams in individual locations to its centralised accounts function, which is particularly important for larger businesses. 

“We have a very, very strong accounts team, and the primary intention of that team is to ensure the highest quality of experience,” Armstrong said. “From how you engage with us through the buying process right through to how you're retained in service during your time with us.”

Stressing the benefits of a centralised accounts team is a long way from Neumann's 2019 pronouncement that “the We Company's guiding mission will be to elevate the world's consciousness.” But it's a new day for WeWork. 

Growth in the UK has not been ruled out, Armstrong said. Yet it will only happen where locations are so successful that there is clear demand from members or where it can work with individual companies to manage space for them on a contractual basis. One such agreement happened in December when it leased 304K SF in Manhattan, which it will manage for Amazon. 

Long gone are the days of scaling for the sake of it and capturing market share at almost any cost. 

“As it relates to growth, all of that will be measured and proportionate to the need,” Armstrong said.