WeWork Reviews Birmingham Commitments, Exposing City's Vulnerability To Coworking Downturn
WeWork is rethinking its strategy in Birmingham as it confronts what could be an existential crisis.
Knight Frank has been chosen to review the coworking giant's UK property portfolio.
It is not known if the review, aimed at cost cutting, will mean the surrender of any leases, Place NorthWest reported.
WeWork had been due to welcome members to the 97K SF Six Brindleyplace when it opens for business in early 2020. The base would be its third Birmingham outlet.
WeWork also operates from 55K SF 55 Colmore Row.
A question mark has long hung over WeWork’s second Birmingham acquisition, proposed for the 81K SF block at Louisa Rylands House. A deal was agreed with landlord Euro Property Investments Limited in June 2019, amidst expectations that it would be open for business in spring 2020. That expectation already seemed unlikely to be fulfilled. A target opening date of Q4 2020 has been discussed.
PlaceNorthWest quoted one Manchester agent describing WeWork as “a basket case” and asserting they have too much floorspace in the city. Birmingham agents have been more restrained but the sense that something had to give has been apparent for some time.
After a slow start, Birmingham is unusually exposed to the coworking and flexible office space sector. Data released by Avison Young as part of its Big Nine regional cities analysis for Q1 2020, showed that flexible space accounted for 24% of Birmingham’s office market take-up in Q1.
This ranks the city on a level with Edinburgh (24%) above Manchester and Bristol (both 16%). Flexible workspace did not feature among the top three occupational sectors in the other five regional cities.
WeWork’s valuation crashed from $47B to $12B in the months leading up to an ill-judged flotation attempt in September 2019. Since then its woes have multiplied, with its funder Softbank refusing to buy into a $3B stock option and the coronavirus pandemic leading the firm to try to renegotiate some rent payments with landlords.
