The global property services firm has formed a strategic partnership with WeWork as it explores a $150m investment in the flexible workspace company.
Announced days before WeWork reported a net loss of $923m in Q2 2021, the partnership will look to combine WeWork’s workplace experience management software with Cushman & Wakefield’s asset and facilities management services.
The two businesses said they will use both WeWork’s existing management experience platforms and “new jointly developed solutions” to create hybrid work options for office tenants.
Alongside the partnership, Cushman & Wakefield and WeWork are in discussions about a potential £150m investment ahead of WeWork’s merger with the BowX Acquisition Corp SPAC.
Having previously pulled its IPO, the flexible office provider found another route to going public through a merger with BowX Acquisition Corp earlier this year in a deal that valued the company at $9bn.
The partnership with Cushman & Wakefield, a global giant in traditional commercial real estate, reflects WeWork’s continued strategy of becoming a more stable company while tapping into a growing demand for hybrid working.
Meanwhile, Cushman & Wakefield sees flexible offices becoming integral to a landlord’s offer to occupiers. Teaming up with WeWork indicates confidence that WeWork’s advantages – its size, scale and experience in flexible workspace – outweigh past mistakes and that it is serious about a more focused business strategy.
Sandeep Mathrani, CEO of WeWork, said: “As Covid-19 has fundamentally changed the way people work, businesses and landlords have had to rethink their approach to workspace.
“Partnering with Cushman & Wakefield will combine WeWork’s industry-leading workplace experience management platform and hospitality-driven community teams with Cushman’s world class global client and property portfolio to create a solution that helps both landlords and businesses meet the demand for flexible workspaces to fit the changing needs of today’s workforce.”
Brett White, executive chairman and CEO of Cushman & Wakefield, said: “With flexible workspaces being an important component of the hybrid workplace, we’re excited to partner with WeWork to demonstrate how global occupiers and investors will benefit from the power of two global leaders providing unmatched accessibility to flexible offerings, best-in-class technology and a seamless tenant experience.”
WeWork’s Q2 results
The headline figure from WeWork’s results was a $923m net loss in the quarter with revenue of $593m.
Though substantial, the loss was a marked improvement on the company’s $2.1bn loss the quarter before. Revenue was down 0.8% on Q1’s $598m.
WeWork’s results highlighted that revenue has been rising since hitting a trough in April, growing from $187m in April to $209m in June. Indeed, total memberships rose by 27,000 to 517,000 and occupancy rose a couple of percentage points to 52%.
At the same time, WeWork has cut its footprint marginally to 937,000 workstations (963,000 in Q1) in 763 locations (774 in Q1). Enterprise memberships – corporations that commit to longer leases – accounted for 51% of total memberships and their average lease length increased from 27 to 30 months.
WeWork estimates that it achieved $400m in annualised rent savings in its ‘optimisation’ efforts, which included terminating 30 leases and executing 80 lease amendments in Q2 alone.
The company said: “As WeWork’s portfolio optimisation efforts come to an end, the company will continue to proactively manage its portfolio sustainably.”
Going after retail
Along with its Cushman & Wakefield deal, WeWork has struck another partnership with Canadian retail operator HBC, owner of US luxury department store chain Saks Fifth Avenue.
The pair are launching a new membership club, SaksWorks, which will offer “stylish work and meeting spaces, artisanal cafes, retail, fitness studios and programmed events all under one roof.”