WeWork closes in on next Manchester sites
Co-working operator WeWork is understood to be close to deals totalling a combined 100,000 sq ft within 125 Deansgate and Dalton Place, as well as progressing discussions for a fifth base in the city.
At Deansgate, WeWork is under offer on four floors totalling 45,500 sq ft within the 116,000 sq ft office, currently being built by developer Worthington.
Knight Frank and Savills, joint agents on the building, declined to comment.
US-headquartered WeWork is already present in the city at No.1 Spinningfields and One St Peter’s Square, where it occupies 60,000 sq ft and 40,000 sq ft respectively, deals that were agreed in the summer and autumn of 2017.
There has been much talk in the market about WeWork’s plans for further Manchester locations: it was for a long time linked to the Amazon deal at Hanover in NOMA, with the possibility of a flexible deal being worked out where one party would sub-let from the other according to demand.
A fourth and even fifth WeWork Manchester site is still being sought, say agents, with suggestions that Dalton Place – the former KPMG St James’s House office block – is also close to securing a deal. The building is owned by Tesco Pension Fund and totals around 65,000 sq ft. Again, agents declined to comment.
Other buildings that have been considered and might still be in play for the fifth WeWork include Boultbee Brooks Real Estate’s Hyphen on Mosley Street and the refurbished Bauhaus off Quay Street, although one agent told Place “they’ve looked at pretty much everything in town that’s got around 50,000 sq ft to offer”.
Place understands that a development under consideration had been the whole of the 55,000 sq ft Cornerblock, the former Bruntwood building at the junction of Deansgate and Quay Street, but current owner Credit Suisse was reluctant to let the building as a whole, a hint at the caution some institutions are exercising around over-investment in the co-working boom.
That boom has been considerable in the last two years. Over the course of 2017, the volume of office take-up in the major regional cities outside London accounted for by co-working space climbed from 2% to 7.5% according to Cushman & Wakefield. The Central London market over that year saw flexible workspace take-up rise 190% to 2.5m sq ft.
In October, WeWork, which has attracted billions in VC funding and has become known for its focus on community, reported that its European losses had tripled to £32.3m as it undertakes rapid expansion, but that UK revenues had doubled as its initial investments started to pay off.
One of Manchester’s largest new-build office projects, 125 Deansgate has been designed by Glenn Howells Architects for Worthington Properties. At the start of 2017, Worthington secured a £45m loan facility from three public funds for the development, which is due for completion in 2019.