When they write the book about the London office market, WeWork will no doubt merit its own vivid chapter. However, history’s ultimate verdict will probably be that it simply – and brilliantly – reimagined a product the already existed (serviced offices) and completely outmanoeuvred a raft of property providers who had failed to respond to a trend that was evident long before Adam Neumann and his cohorts entered the market.
What has powered the London office market for several years now and given rise to the ‘footloose occupier’ was the advent of Wi-Fi and massively increased bandwidth which, essentially, takes the traditional office format out of the equation. Goodbye miles of IT cabling, goodbye server room, goodbye fixed workstations, goodbye to work ending when you turn off your PC and go home (not all progress is good).
It’s easy to forget that one of the reasons that businesses used to take long leases was because of the capital commitment to fitting out an office and the potential disruption of having do that all again in another location. It was as much about risk mitigation as putting down roots.
Tech and connectivity made office occupiers ‘footloose’. It freed them from a particular building or location within a city. WeWork’s genius was to take that trend, marry it to the boom in start-up companies and produce a brand that resonated with the target audience.
But it was tech that was making all this possible: turning buildings that were often, frankly, ‘dogs’ into best-in-show workspaces.
So the postponement of the WeWork IPO is telling us about that specific business and not what’s happening in the office sector as a whole.
Yes, there would be considerable collateral damage if WeWork falters, but there’s a precedent. Less than a decade ago, Business Exchange was the largest serviced office provider in London with 39 centres. Today WeWork has 51 across the capital albeit with much more floorspace. In 2014, Business Exchange was struggling and was bought out by Regus which eventually became IWG – which has recently been put under enormous pressure by WeWork and is now looking at its own listing.
However, if you want to see where the London office market is going you have to look at tech and demographics: how people are able to work and how people want to work.
As 2020 approaches, we probably all need to start reading less about WeWork and more about 5G and the Internet of Things. In the meantime, the ‘footloose occupier’ is very much here to stay.