EU Pays €62m To US Firm WeWork As ‘Financial Inducement’ In Brexit Relocation Case

The uncertainty over Brexit is forcing the relocation of the European Medicines Agency from London to Amsterdam and as a part of this relocation process, a US firm is reportedly being paid a sum of €62m in “financial inducements” to help in this.

According to reports based on European Union documents, the former headquarters of the EU agency in London would be sublet by WeWork, a $47bn property company founded by Adam Neumann and Miguel McKelvey, as a part of the relocation process and the US firm is being paid the amount out of the taxpayers’ money from the UK and the European Union.

The decision of the UK to leave the EU has forced relocation from the UK to other European Union member countries for all UK-based EU agencies. The right to host the EMA was given to the Netherlands while the European Banking Authority has been awarded to Paris. In the case of the EMA moving to the Netherlands, the agency was not able to come to an amicable solution to cancel a 25-year lease with its landlord, the Canary Wharf Group, and therefore the agency now has decided to sublet the premises. That subletting work would be done by WeWork.

If the EU agency had left the about 26,000 sq metres (280,000 sq ft) of office space at 30 Churchill Place in Canary Wharf in London without subletting it, the agency would have faced costs of about £500 million.

The agency would be able to recoup an undisclosed amount of those costs because of the subletting deal with WeWork. However, the EU has had to pay €62m to the US company to make the deal attractive for it according to the reports based on EU budget documents. The amount covers the costs for 2019-20.

However, the Brexit uncertainty has forced many companies to leave London and shift to other EU member states which have left a lack of demand in the London commercial property market. That would make the efforts of the EMA to sublet the property a big challenge amidst a lot of competition.

However the US company described the Canary Wharf location as a “desirable location for our member businesses who are rapidly scaling as well as the large enterprise companies who now represent 40% of our global membership” in an effort by the company to make the location attractive.

There were no comments available from the Department for Exiting the European Union.

The costs of €6.5m ha the EU has paid to WeWork is an added amount to the forecast outgoings that has to be filled up by the 28 member states of the EU, claimed reports based on the EU’s budget documents for 2020.

Operational in 27 countries in renting and leasing office space to third parties, WeWork is scheduled to launch its initial public offering sometime later this year. In London, only the UK government has a greater occupancy in the commercial office spaces than WeWork. The US firm has about 275,000 sq metres of space in London.

(Adapted from TheGuardian.com)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s