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The decision by a Manchester landlord to pull out of a deal with WeWork because of the potential negative impact the flexible office space provider could have on the valuation of its building may be something Dublin owners need to think about, according to Goodbody Stockbrokers.
WeWork had been under offer to pre-let 43K SF on the first five floors of Worthington Properties’ 125 Deansgate scheme, which is currently under construction and due for completion at the end of this year, according to a Property Week report.
It’s understood Worthington Properties cited the effect WeWork’s covenant could have on the potential investment value of the building, which will comprise 117K SF of offices and 12K SF of retail over 12 storeys.
Goodbody noted that the news came a week after Japan’s SoftBank Group decided against investing $16B in WeWork via its $100B Vision Fund on the back of opposition from two main investors.
Goodbody said that given the volume of space let or pre-let to WeWork in Dublin and London last year — it estimates around 8% and 5% of total take-up, respectively — Worthington’s decision could set an interesting precedent.
“WeWork is now the largest corporate office occupier in Central London with an estimated 3.2M SF of space — and leasing commitments of over £3B — and is building an impressive footprint in Dublin,” Goodbody said. “If accommodating such a tenant is considered as weakening the investment value of a property in Manchester, could the same well be the case for London and Dublin?”
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