Landlords could face £3bn shortfall following WeWork collapse
The future of the UK’s biggest office space provider company remains uncertain putting landlords at risk of a £3bn deficit.
The work-from-home trend, which came into full force following the Covid-19 pandemic, has been widely accepted by employers and staff, but has had detrimental effects on establishments, especially in London.
WeWork, a leading UK office space provider, holds the distinction of being the capital city’s primary private tenant however, the company are reportedly struggling to manage its extensive list of rental commitments. In London the company owns almost three million square feet of space, a size equivalent to three Shard skyscrapers.
According to analysis conducted by the Telegraph, WeWork’s UK branches have locked in leases valued at £3.1bn across 50 British sites.
Against this backdrop, recent findings have also found that WeWork held lease commitments in the UK worth £3.8bn by the end of 2021. Despite shutting down several venues, the company still retains debts worth £3.1bn spanning 56 properties, with some leases extending up to two decades.
Well-known WeWork establishments in London include the 301,488 sq ft Southbank building, owned by Mike Hussey’s Almacantar, and 1 Poultry, which is sunder South Korea’s Hana Financial’s ownership.
In addition, Brookfield Property Partners are stakeholders – they own a 285,000 sq ft WeWork facility in Canary Wharf.
David Tolley, WeWork’s interim CEO, said: ‘Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships.’
However, despite challenges, a WeWork representative exuded confidence, as they said: ‘We are confident in our ability to meet the evolving workplace needs of businesses of all sizes across sectors and geographies, and our long term company vision remains unchanged.
‘Our members remain our top priority, and we are resolutely focused on delivering for them for the long term.’
As well as Landlords who own office spaces in London loosing money, those involved within the housing sector are also facing financial turmoil. As the cost-of-living continues to bite, recent findings have shown more people have made the decision to move out of the city. In 2022, estate agents based in the Hamptons reported seeing more than 150,000 households leave London for the commuter belt and beyond.
Image: Javier Martinez
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