WeWork UK expansion revs up with move into two more cities

WeWork has expanded into Cambridge and confirmed its move into Birmingham, taking the business to five locations in the UK. The flexible serviced office provider is taking around 40,000 sq ft across the ground, first and second floors within 50/60 Station Road in Cambridge, which is being developed by Aviva Investors and Brookgate. The 156,348 sq ft office building will form part of the wider regeneration scheme of the Station Road area, known as CB1. It is 90% let, with only 14,916 sq ft remaining on the eighth and fifth floors. The deal stuck by WeWork with Aviva in Cambridge is also its fourth revenue-sharing deal in the UK and its first outside London. These earlier revenue-sharing deals have included some of the space at Devonshire Square in London, EC2, where WeWork also holds a 10% stake in the property alongside Denmark’s biggest pension fund, PFA Ejendomme, and Nuveen. “We are financially happy to partner with landlords and share the upside of a partnership with WeWork,” said Patrick Nelson, head of WeWork EMEA, real estate. “We have a great business model, and it’s also a great financial model. As landlords get more understanding of how the business model operates, they say ‘Great, and if you are bringing additional value to our buildings we want to partner with you.’ “From WeWork’s point of view, it’s great to have a sustainable, mutually beneficial relationship with any landlord – and certainly a landlord as established and as high quality as Aviva. That’s very attractive. He added: “We want great real estate and we are happy to do leases and we are happy to do revenue shares. We are happy to discuss whatever deal structure is beneficial.” Recurring theme Melanie Collett, head of asset management, real estate at Aviva Investors, added: “A recurring theme in the industry is that occupiers want to have flexible space. So what it means is that we will have that flexibility in our building and have that partnership with WeWork, which means we will be constantly looking at the figures to see who wants what space and who is growing – as well as making sure within the Cambridge market we are incubating occupiers and growing them within our partnership and our portfolio. “We are aligned in the numerical sense with the way the rents have been structured, but we want to work closely together so that we are jointly attracting talent into the building. It’s a really strong partnership that we want to grow. “We have obviously worked very closely with WeWork and with our valuers and our fund management team on assessing how you structure this. It’s a market that’s really evolving at quite some pace. “Inferior serviced office product within the immediate vicinity [of 50/60 Station Road] still has 100% occupancy and a waiting list – with desk rates at about what we are targeting.” She added: “We are piloting a number of initiatives across our portfolio and the way our lease structure evolves will be [guided by] monitoring very closely how all this works out.” The deal was not done via ARK, the recently launched global acquisition and management platform for WeWork from parent firm The We Company. Nelson said the platform was one of several ways WeWork would look to expand and unlock city gateways, but deals in the UK would also still be done separately by the WeWork operating company. WeWork expects to open its space in Cambridge in the third quarter of this year and hopes to accommodate more than 1,000 members within that space. Meanwhile, WeWork has also confirmed its move into Birmingham, where it has leased space at Nuveen’s Grade II listed 55 Colmore Row, next to St Philip’s Cathedral. Nelson added: “[WeWork’s expansion] is very much driven by member demand. “As our business has evolved, one of the big mutations – which I think is critical to our business – is enterprise demand, which we define as 1,000 employees or more, and now more than a third of Fortune 500 companies are members. “They are coming in for the community and the ability to attract the most talented people. With increasing demand from enterprise, overall demand for WeWork in London is greater than it has ever been – and that demand is also increasing faster than it ever has, as we unlock a whole new market.” To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette