Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
A London office bloc leased to WeWork is now a costly problem for the European Union, which faces a potentially staggering £370 million bill.
According to a report published by GB News, in 2011, the European Medicines Agency (EMA) committed to a 25-year lease worth £500 million for a 280,000-square-foot space at 30 Churchill Place in Canary Wharf. However, after Brexit, the EMA decided to relocate 900 staff members to Amsterdam and sublet the office space to WeWork in 2019.
The future of the building is now in question after WeWork filed for Chapter 11 bankruptcy in New Jersey on Nov. 6, 2023. While the bankruptcy filing does not directly impact WeWork’s U.K. subsidiary, which sublets the building, the U.K. organization is also struggling with big financial losses. GB News reported that a document now circulated to the European Parliament’s budget committee said the U.K. branch of WeWork would soon stop paying rent on the building.
Elected officials believe that the EMA’s relocation and subsequent financial repercussions stress the need for more responsible foresight on impactful real estate and economic commitments. According to a recent report published by Wion News, London’s Mayor Sadiq Khan claims Britain leaving the European Union has reduced the country’s economy by 6 percent so far, which is reported to be an annual cost of £140 billion ($178 billion).
The EMA has already made a request for additional funds to cover the cost in this year’s budget. That’s because, should the building remain vacant throughout the rest of the year, the EU will incur a £27 million expense. According to GB News, the EU is obligated to pay £373 million in rent for 30 Churchill Place until June 2039 unless a more permanent resolution is found.
Organizations in the U.K. are now more than ever evaluating the necessity and scale of their physical office spaces, and this can be seen in market movement in London. According to data published by The Instant Group, the top market for flexible desk demand in 2023 was London.
