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March 11, 2014 11:13 am
WeWork, the shared office space provider that is expanding aggressively across the US, now has its sights on London, Amsterdam, Berlin and Tel Aviv as it looks to take advantage of the growth of coworking.
The New York company, which houses 2,500 small businesses in its 17 buildings across the US, will have 25 locations by the end of 2014 in cities such as New York, Chicago, San Francisco and Los Angeles. WeWork plans to spend more than a $150m on its domestic development this year.
A UK base will open in August at the Mondrian hotel in the former Sea Containers House on the river Thames, while plans for the other destinations are also in the works, Adam Neumann, WeWork’s chief executive and co-founder, told the Financial Times.
The trend of coworking has surged in recent years driven largely by technology companies, enterprising twentysomethings and cost-conscious workers who launched small businesses or started to freelance after the financial crisis.
Through a membership model WeWork charges from $350 a month for a one-person desk in an open-plan room to about $70,000 for an office space for 150 people. Companies span the spheres of architecture and design to finance and fashion with about 80 per cent made up of one- to six-people businesses.
WeWork, which was founded in 2010, seeks to take on the publicly traded Luxembourg-based Regus, the world’s largest shared office space provider, which has 1,831 centres in more than 100 countries. Smaller local competitors such as Grind, Fueled Collective and NeueHouse, some more exclusive than others, are proliferating.
“We have redesigned how we work and are giving a new meaning to the word ‘office’,” said Mr Neumann, 34, who moved to the US from Israel in 2001.
WeWork’s buildings serve as more of a club and incubator for fledgling companies that may later hatch into big space grabbers. Support services from healthcare and car rental to amenities such as relaxation rooms, Xbox lounges and production suites are also part of the monthly fee.
“Unlike many other shared office companies, we’re selling the culture and community as well as the physical space,” said Mr Neumann of the company that hosts events for members, from networking evenings to summer camps. More than two-thirds of the companies are made up of individuals who are less than 40 years old.
Investors in the company include Benchmark Capital, which has backed companies from Instagram to eBay, Lew Frankfort, former Coach chief executive, and the Harvard Management Company, which manages the university’s endowment.
“The shared office space market is in its infancy and will only benefit from an improved macroeconomic picture,” said Justin Jordan, analyst at Jefferies. But he questions WeWork’s ability to maintain the collegiate atmosphere as it expands the business and harbours ambitions for a public offering. “It will be more difficult to keep the same social, clubby feel,” added Mr Jordan.
By 2020 it is expected that about 60m people – more than 40 per cent of the US workforce – will be classed as independent workers, up a third from 2010, according to software company Intuit.
WeWork is also delving into the residential sector. It is collaborating with Vornado Realty Trust, the New York property company, to convert an office building in Washington’s Crystal City into a 300-unit residential project catering to skilled-younger workers. Other projects in Washington and Northern Virginia are in the planning stages.
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