Negotiation with WeWork, Keltan House, 89-115 Mare Street

Tender description

Wework has a lease from the Council of a 30,000sqft office building - part ground, first, second and third floors Keltan House. Annual rent £908,000. As a result of the COVID-19 pandemic, WeWork’s business has been heavily restricted and the company has suffered a very damaging financial impact. WeWork are now trying to renegotiate lease terms with landlords around the world, and in some cases are attempting to withdraw from contractual arrangements. WeWork have made a proposal to the Council upon which they have advised they will remain in the building. If the Council does not reach an agreement, there is a considerable risk that WeWork will seek to close this SPV tenant and leave the building. The Council would be entitled to 6 months rent under a letter of credit, but thereafter would face a substantial void cost, potential for some years in an uncertain market place. This is exacerbated by the need to let 2 Hillman Street next year - a building of similar size and configuration. In view of the risks associated with obtaining vacant possession and reletting, further discussions should be held with WeWork seeking to improve upon the terms currently being offered. In addition to the financial proposal, we would recommend that the Borough asks WeWork to offer an element of discounted accommodation for SMEs or apprenticeship positions/contributions to training as being promoted within the Council.