Unwinding The WeWork Portfolio In UK Regions: The Landlords Are Talking
WeWork’s Manchester and Birmingham landlords are considering whether to operate flexible workspace themselves or under management agreements, or to find new occupiers for WeWork hubs, as the global coworking giant reconsiders its property portfolio.
The discussions, reported to be managed on behalf of WeWork by Knight Frank and JLL, are expected to conclude early next month. They will decide the future of 232K SF in Birmingham and 307K SF in Manchester.
At least one WeWork deal could already be in doubt. In April 2019 the coworking business signed up for the entirety of Boultbee Brooks/CBRE Investors 51K SF Hyphen building, Moseley Street, Manchester. The site is listed by WeWork's sales platform but illustrated with images from other hubs. However, the Hyphen website does not record the deal, and the whole of the building is listed as available.
Neither Boultbee Brooks nor its agents, OBI and Savills, responded to Bisnow’s enquiry.
Doubts had been raised before the coronavirus pandemic about the future of the 81K SF letting to WeWork at Louisa Rylands House, Birmingham. WeWork's website flags this site as opening in December 2020.
In Birmingham, attention focuses on Hines’ Six Brindleyplace where WeWork signed for 97K SF due to open in early 2020.
“WeWork Brindleyplace is still progressing as planned, but just like many landlords and occupiers at the moment, both sides are looking at their options.” Hines told Bisnow in a statement.
Nuveen declined to comment on the situation at 55 Colmore Row, Birmingham, where WeWork signed for 55K SF and opened in November 2019.
In Manchester Schroders, which let 60K SF to WeWork at No 1 Spinninfield, Manchester, declined to comment. The hub opened in 2018.
The consensus among agents is that alternative operators could readily be found for WeWork floorspace in either city, should it become available.
"I'm speaking to a number of operators looking to acquire additional space in Manchester and the regions," Colliers International Regional Flexible Workspace Consultant Patrick Kennedy said. "Today the flexible and serviced sector accounts for about 4.5% of the Manchester office market, I'd expect that to rise to 6-7% in the next two to three years.
“The sector is set to thrive for sure and we're continuing to see more corporate interest in flexible workspace whereby a number of corporate occupiers are seeing the merits of aligning themselves with an operator for a percentage of their portfolio.”
As recently as August 2019 WeWork was preparing for further acquisitions in the UK regions.
The firm’s aggressive growth was driven by ambitious valuations and backing from SoftBank. Masayoshi Son, the chief executive of the Japanese tech company, admitted in April that his $9B investment had been a mistake.
"WeWork believes in the long-term prospects of our locations and our relationships with landlords," a statement issued to Bisnow by WeWork said.
"As part of our plan to seek profitable growth, we are conducting an in-depth review of operations and assets globally in order to rightsize the business and optimise our real estate portfolio. As we work through this process, we are working with industry partners where appropriate."