WeWork Face Pricing Concerns As Manchester Rethink Nears Its Conclusion

WeWork has indicated that it will not cut prices in one of its UK regional flagship locations, even though occupiers might need more space to meet social distancing requirements.

In an email circulated earlier this week, WeWork offered desks at existing prices and densities. This included a Manchester Spinningfield 42-desk room, with three meeting spaces, at £24,870 per month.

A large proportion of the floorspace at No. 1 Spinningfield is divided into smaller offices, making it harder for occupiers to create a socially distanced workplace if they maintain existing desk densities.

“In the short to medium term the flex sector has to navigate social distancing very carefully because of the impact on its model,"  Avison Young UK Regions Managing Director Chris Cheap said.

"Pricing is going to have to be re-calibrated to reflect what the customer is actually getting, as densities will be so different to what they were pre-COVID. Those who don’t react to this are going to struggle to maintain revenues and brand loyalty going forward."

Whilst WeWork spokespeople said it has always prioritised flexibility and will continue to work with and support members on how they best choose to utilise their office space, there is no suggestion that they will modify desk-based pricing structures.

WeWork is continuing a review into its UK regional bases expected to conclude soon.

"We remain committed to our members in Manchester, an important city for us, and the first UK location that we launched WeWork outside of London," WeWork said in a statement to Bisnow.

"WeWork has become a trusted local partner for businesses of all sizes and as companies continue to reassess their workplace strategies, we look forward to providing our current and prospective members with flexible solutions."

The lease at No. 1 Spinningfield is in the name of No. 1 Spinningfield Tenant Ltd, a special purpose vehicle in which WeWork has significant control.

A statement of financial position filed on 30 September 2019, shows that at 31 December 2018 No. 1 Spinningfield Tenant had rent liabilities of £1.6M due during 2019, £6.6M due between two and five years, and £25M due after more than five years, a total of £33M. Some reimbursement from the landlord was due when contractual obligations were fulfilled, but the report did not quantify this sum.

WeWork has repeatedly said that all options are on the table during reviews as it seeks to craft a long-term viable business from the hectic growth of the last three years. A management agreement, allowing WeWork to continue to operate the workspaces on behalf of their landlords, has been floated.

Schroders did not respond to Bisnow’s invitation to comment.