WeWork To Buy Devonshire Square Estate For £600 Million

WeWork, the shared-office business, is reportedly in exclusive talks to buy a 12-building campus in London’s financial district for more than £600 million.

According to Bloomberg, New York-based WeWork has agreed to buy Devonshire Square, a group of former warehouses close to Liverpool Street rail station, from Blackstone Group LP.

Devonshire Square is three minutes from Liverpool Street Station
Source: Devonshire Square

 

The estate has more than 620,000 square feet of offices, shops, restaurants and a private members club.

It was pieced together and developed by the East India Company from 1768 to 1820.

The warehouses were originally designed to store silk and textiles and were later used for tea, ostrich feathers, oriental carpets, cigars, drugs, spices and other artefacts.

Blackstone bought Devonshire Square for about £340 million in 2012 and has modernised the campus and filled office space vacated by global professional services firm Aon.

WeWork will take over management of the 5-acre estate, which covers the equivalent of four football fields, when the deal is completed.

It will also occupy the vacant space and add more facilities, people with knowledge of the plan said.

WeWork has reportedly appointed Eastdil Secured to source credit to finance the Devonshire Square purchase.

Spokespeople for Blackstone and WeWork declined to comment.

The deal would be WeWork’s second major property purchase after the company announced plans to buy the flagship Lord & Taylor building in Manhattan with Rhone Capital for $850 million.

Lord & Taylor will rent out about a quarter of the building, where it will operate a pared-down department store, while WeWork will use the rest of the building for its global headquarters and to lease shared office space to its customers.

The Lord & Taylor building on Fifth Avenue opened its doors more than a century ago and is a temple of urban commerce
Source: Wikimedia

 

The company has already bought two small offices in London, which it plans to modernise.

Meanwhile, Blackstone is reaping significant returns from the London property portfolio it assembled in the wake of the global financial crisis.

The US private equity giant sold the 220,885 square foot Lacon House office building for £285 million in August after completing a comprehensive refurbishment of the building.

It is also said to be offering the Cannon Bridge House building, the headquarters of IG Group, for sale for about £250 million. It bought the property for £170 million in 2015.

Cannon Bridge House is leased to companies such as Deliveroo owner Roofoods
Source: Wikimedia

 

DealMarkerz thinks the WeWork deal is another example of how co-working companies are becoming the dominant source of demand for London office space.

Tenants are seeking more flexibility and informality in a space that is untethered to traditional offices.

Research suggests co-working is beneficial in both running a business and maintaining a professional career, predominantly by enabling people to efficiently network.

WeWork is attracting substantial funding from the likes of SoftBank Group, which agreed in August to invest $4.4 billion in the company to fuel its global expansion plans.

The company has expanded from two locations in New York City when it was founded in 2010 to more than 160 locations in 52 cities across the UK, the US, Europe, Australia and Asia.

In London, the start-up operates from 17 sites and it plans to open another nine sites in the capital soon.

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