WeWork Europe Expansion Faces Growing Competition Before IPO

WeWork gets a lot of headlines for its breakneck expansion into new markets, and that’s only likely to increase now that it plans to go public, according to Bloomberg. Yet the company faces stiff competition in Europe from established work-space providers like IWG and local startups.

The number of serviced and co-working offices across Europe has ballooned by more than 200 percent in the last five years, according to a report by real estate broker Colliers International Group. WeWork has helped to drive this growth: it has nearly 50 locations in London and has added sites from Manchester to Moscow.

While WeWork initially rose with the advent of the gig economy and an explosion of startups, big companies are increasingly seeking more flexible offices, too. Corporate clients now make up about a third of WeWork’s customers. IWG, which owns the Regus brand, has traditionally catered to corporate customers.

WeWork and IWG account for about 78 percent of the European market for flexible work-space, Colliers data show. WeWork had about 600,000 square meters of office space in Europe at the end of 2018. That put it ahead of IWG, whose Spaces brand is more closely comparable to WeWork venues than the traditional serviced offices operated by its Regus unit. IWG is considering selling Spaces.

A growing list of local operators are now battling WeWork and IWG for market share. Blackstone Group’s The Office Group and Germany’s Design Offices are at the front of the chasing pack. Each of the firms has about 80,000 square meters of flexible office space, according to Colliers. In many major European markets, including London and Paris, smaller local players collectively account for a majority of the flexible office space market.

WeWork’s IPO, and the financial information it discloses in the process, could prove useful to its rivals. These companies will be eager to learn how much WeWork spends to open new locations as well as its long-term occupancy rates and the rate at which tenants renew their leases.

Changes in the workforce underpin the spread of flexible offices. Across Europe, nearly half of workers are self-employed, on temporary contracts or part-time, perfect conditions that have fueled the flexible work-space boom.