- Co-working office provider WeWork will become London’s biggest private user of office space.
- The move represents a big bet on the resilience of post-Brexit London’s office market.
The seven-year-old New York firm, valued at over £15 billion ($20 billion), is known for its trendy co-working offices which feature free beer taps and other perks. It currently operates 17 offices in London and is set to announce a further 10, according to CoStar’s data.
The move represents a big bet on the resilience of post-Brexit London’s office market. Business Insider reported in October that the firm had signed up to lease commitments in London of more than £2 billion over the next 25 years.
WeWork signs a long-term lease on a building and then sub-letting component parts of it on much shorter terms. The model has so far proved a hit with startups but could prove risky in a cyclical downturn, which many analysts believe London is heading towards.
WeWork has argued that uncertainty surrounding Brexit will support its business because firms will avoid long-term commitments. Industry figures, meanwhile, have warned that WeWork’s business model is untested.
“[Flexible operators have] been accumulating a lot of space, they’re all in expansion, and… they’re not cycle-tested,” said Kevin McCauley, head of London research at commercial property firm CBRE in November.
That is “something really to beware of, because we’ve been through this previously. I would argue that the economy and the market has changed, but again, the model is yet to be tested,” McCauley said.
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