WeWork will now not be leasing space in a new commercial building in Manchester after failing to reach agreement with the landlords, it is reported.
The co-working organisation already has two locations in Manchester and was expected to open a third in a flagship new building at 125 Deansgate in the city centre. However, regional property website Place North West reports that the developer was concerned that WeWork’s tenancy would not raise the asset value of the development sufficiently.
Place North West comments: ‘When WeWork leases space it creates a special purpose vehicle for each location, to reduce the risk to the parent company. However, this means that as a tenant, WeWork isn’t seen to have the covenant strength of a well-established law firm. There has also been rising scepticism in the property market as to whether appetite for co-working space will continue to match WeWork’s rapid expansion.’
Shared office space is regarded by some as the future for the commercial property market, and the highly prolific WeWork appear to have ambitious expansion plans. However if an operator of this stature isn’t regarded as good enough in other cities too it could place a question mark over just how this model will develop.