WeWork Rival Workspace Is Losing More London Office Tenants

(Bloomberg) -- Workspace Group Plc, the London-based flexible office landlord, has lost tenants during the pandemic and expects more of them to follow.

Vacancies increased by 3% in the second quarter while most of the country was locked down and as customers reviewed their requirements, Chief Executive Officer Graham Clemett said in a statement Thursday. While the company’s centers remain about 90% full, it expects “to see continued pressure on occupancy levels in the short-term,” he said.

The coronavirus has set up a make-or-break moment for serviced office companies that have grown in popularity over the past decade, such as WeWork. Short leases and dense office layouts make them especially vulnerable to cut-backs and social distancing demands. At the same time, the uncertainty ushered in by the virus lends weight to the case for greater lease flexibility for firms.

Workspace is among the older operators in London and, in contrast to newer rivals, the company owns its buildings, making it less vulnerable to sudden downturns in rental values. That meant it was able to halve customers’ rent in the second quarter to help them cope with the lockdown.

While restrictions are lifting in London, the company’s business centers remain at just 15% of their usual activity levels, according to the statement. Enquiries, which plummeted in April during the height of the lockdown, recovered to about 75% of normal levels in June.

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