In January, I posed the question whether the serviced office sector had overheated? Since then IWG has agreed to sell its Japanese serviced office sites for £320m causing its share price to soar and yesterday The Times reported that Wework, with a valuation of approximately $47billion, is looking to launch on the Stock Market.
Wework has yet to return a profit. The sceptics continue to query whether its valuation and indeed, its future, is sustainable. What if recession hits? What happens when the rent frees it has negotiated expire and hefty rents kick in? What if people tire of free beer, ping pong and the wider "community" appeal? There are a myriad of "what if's"
Whilst, the detractors will remain , Wework continues its meteoric rise. It now controls £3.4 million sq ft of office space in London. It has been a game changer in the office leasing market. The conversation, good and bad, is all about Wework. As a result the serviced office sector is now recognised as more mainstream with institutional landlords and investors happy to take on serviced office providers as tenants and traditional landlords introducing their own flexi space concepts and prepared to let on more flexible terms which a few years ago they would not have entertained. This must be good news for tenants and the letting market as a whole.
“It’s only 5 per cent of the market, but it’s 100 per cent of the conversation.”