WeWork is cutting the cost of some new memberships in the UK by up to 75%, as flexible office space providers position themselves to win new customers once the coronavirus crisis passes.
EG understands that some new members are being offered up to three-quarters off their membership fees, which reduce in phases to 25% towards the end of a six-month contract.
Market sources said the discount was notably larger than deals rolled out pre-Covid-19, as well as being higher than offers made by other flexible office companies. WeWork declined to comment.
Industry figures believe that the pandemic could present an opportunity for flex office space providers to grow their customer bases. Global consultant McKinsey & Company has said that a “transformational approach to reinventing offices will be necessary” in a post-Covid-19 world, and flexible leases, flex space and co-working places will be part of the solution.
A JLL report on the implications of coronavirus for global real estate said demand for flex space is likely to strengthen, with many companies “anxious not to commit to big capex projects or make any firm employee headcount forecasts” as a result of the pandemic.
WeWork is not alone in slashing its membership fees as a result of the pandemic. Workspace has offered three-quarters of its customers a 50% rent reduction during the three months to the end of June, equating to roughly £15m of revenue.
Several companies are betting big on the flex space market. Legal & General, for example, is looking to double the amount of its flex space offerings by the end of the year from 26 to 55 Capsule spaces.
L&G office sector lead Andrew Mercer said the serviced office market would be a “massive opportunity” for businesses in the medium term as the world emerges from lockdown and enters a tougher economic climate.
“Where these serviced offices do really well is in recessions, where you are going to see some redundancies coming through and people start setting up on their own,” Mercer said. “If they can get over this initial period… there is no doubt that their potential is huge.”
WeWork is still fighting to prove it can become profitable. SoftBank, its major backer, made a ¥720.8bn (£5.55bn) loss on its investment in the company over the year to 31 March. SoftBank invested a total of $10.3bn (£8.5bn) into WeWork over the course of the year.
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