W.RE boss puts flex in focus across London portfolio

Sascha Lewin, chief executive of asset manager W.RE, has learnt a few things about picking the right flexible office operators to partner with. The company, which has 14 developments in London, has struck deals with multiple operators across its portfolio, including Landmark at 75 Grosvenor Street, W1; x+why at the Arding & Hobbs building in Clapham Junction, SW11; and Work.Life at the Typewriter Building in Borough, SE1. “Just like with hotels, there are different products that can work in different parts of London,” said Lewin. “A luxury hotel is unlikely to sit in Hackney. But a cool, hip, different service offering might.” In Mayfair, by comparison, offerings need to attract people willing to pay premiums to make the rents viable – which is why his company chose Landmark to be its flex operator at 75 Grosvenor Street. Nooks and crannies [caption id="attachment_1263532" align="alignright" width="300"] 75 Grosvenor Street[/caption] Lewin was impressed by Landmark’s confidence, driven by the demand it has seen at its other Mayfair locations, including another on Grosvenor Street. The company has committed to a traditional lease for its space in W.RE’s 75 Grosvenor Street, totalling 23,077 sq ft across the lower-ground, ground, first and third floors, at a rent of £107.50 per sq ft, according to EG Radius data. “They understood that this is a market that they have a lot of occupiers for. They showed us the demand they have and they were willing to sign the lease,” Lewin said. “For our investor in Grosvenor Street this is really important. They don’t want to have the exposure of the management agreement – it affects valuations and there’s some risk in it.” Landmark also helped fill in “the gaps of the building”, making use of space that traditional occupiers “didn’t understand what to do with”, Lewin added. The product of a restoration of three Grade II listed buildings, Lewin said 75 Grosvenor Street is an “incredibly beautiful” but “complex” space to market. “We had lots of nooks and crannies and areas that were quite complicated for traditional occupiers to get their head round,” he said. Offices with historic fireplaces, far removed from the building’s core, might seem beautiful once inside, but practically they posed challenges when compared to simple open floorplates unless there was a specific use for them. “That turned out to be really exciting for Landmark,” Lewin said. “Their business is selling small spaces, so they knew how to control it all. They took the basement and it was a nice clean sweep for us.” Understanding the space Lewin said W.RE itself is learning how to make better use of its spaces, through its experiences as a landlord with various tenants but also through its own experimentation with the 45,000 sq ft The Deck on 8-14 Meard Street, W1, in Soho. The company took the office space in the building back from WeWork and decided to take a shot at managing it itself. “The fit out wasn’t particularly sexy” Lewin said. “But it was reasonably fresh. We said, ‘We don’t have to spend much money and we can just rebrand it.’” But tenants didn’t bite. At first Lewin said the W.RE team struggled to understand what was wrong – it was a relatively new building and still in good shape. After a while, however, they realised the building had “an uncomfortable flavour”. “There was this flavour of WeWork,” Lewin said. “It just created the wrong feeling when you walked in and you knew – you felt – that it was a former WeWork.” W.RE invested more in giving the space a “new and fresh” character and has seen the space perform better since. As a result, recently, when deciding what to do with the Arding & Hobbs building at 315 Lavender Hill, Lewin said the team has been able to see the opportunities more clearly. Not a blip The firm acquired the building in 2018 and decided it would self-manage the common spaces as an amenity. Flex operator x+why took 27,500 sq ft on the third floor on a management agreement, not a traditional lease. “This is not a blip,” Lewin said. “This is part of the way the office world is going to continue to grow.” Instead of avoiding management agreements, under which asset owners and flex operators share revenue, Lewin argues landlords should accept they are part of the new norm and make the most of it – and he said his company is doing just that. With buildings outside of the City core locations like Arding & Hobbs, he said, management agreements can help landlords make more attractive offerings to their occupiers. Standing in a big open room with a domed skylight on one of the upper floors of the Arding & Hobbs building, he gestured at what, with some work, will become one of the building’s lounges. “You’ve got to put the money in upfront,” he said. “If you’re not open to that, you’re limiting your own options severely.” See London lettings information >> Photos © W.RE