UBS Group AG recently hired shared office space operator WeWork to redesign its 30-year old wealth management office in Weehawken, NJ, writes Bloomberg’s Ellen Huet.
When approached with the opportunity, WeWork presented UBS with a clear vision that included the need for a juice bar, meditation room and much more greenery.
The deal is the biggest in terms of revenue for WeWork’s Powered by We business, according to the company. Powered by We started last year to offer large businesses design and office management expertise. The company currently has 30 customers and 11 spaces in use, including an office for Standard Chartered Plc in Hong Kong. WeWork declined to name Powered by We’s other customers, but people familiar with agreements said another is Expedia Group, Inc.’s office in Chicago, according to Bloomberg.
Powered by We generated $13.7 million in revenue in 2017 after $12.7 million in construction costs, per documents Bloomberg viewed related to WeWork’s bond sale. The business also allows WeWork to be less reliant on expensive office leases and instead it can help redesign and run spaces its customers already have. The UBS construction is expected to begin in the middle of next year.
Neither company has commented on the agreement terms.
WeWork’s promise to make UBS’ workspace a more friendly and lively environment for its employees intrigued the bank.
“What can we do to help make that more of a communal atmosphere?” said Tom Naratil, co-president of global wealth management at UBS. “I don’t want to say ‘make work fun,’ because that sounds a little ridiculous, but something that makes it more of an enjoyable experience.”
Although UBS chose WeWork because it wanted fresh ideas for its more than 100,000 square feet space, the companies’ styles have clashed at times. Currently, UBS’ entrance looks like other banks, where clients and employees use different elevators and are in different parts of the building, partly for security reasons. WeWork suggested the bank add a staircase that would invite clients and employees to come up to the second floor together, where there’d be the juice bar and a coffee stand.
“They were actually pressing us much farther than we wanted to go,” Naratil told Bloomberg. “They said, ‘If you want people to work in a silo, shove them into a silo on their way to work.’”
UBS eventually went with WeWork’s staircase suggestion. Naratil said the staircase is, “airy, light and a bit more inviting than just popping into elevator banks.”
Powered by We also offers on-site staff to help run offices. UBS has not decided whether it will purchase that service when the project is finished in 2021.
According to Dave Fano, WeWork’s chief growth officer, more financial institutions are beginning to embrace a new aesthetic—trailing curtains of plants and lounge chairs instead of traditional marble lobbies. “I don’t want to stereotype too much, but I think stones and dark wood and things like that, some of that is going away,” Fano said. “There aren’t that many plants in the current UBS.”
Wall Street as a whole is searching for ways to make their offices more appealing in an effort to lure talent from other industries. For example, Naratil said UBS’ younger employees expect a more communal atmosphere. “I don’t want to say it’s a generational thing, but I do think that as we’re getting a higher and higher percentage of our workforce that is millennial, they’re asking a few more questions,” he said.
UBS has been making cost cutting measures at its wealth management unit, which oversees approximately $2.4 trillion. Although WeWork was not the “cheapest option” for UBS’ office renovation, according to Naratil, he said he saw the value in trying to keep employees happy.
“Our usual course would have been to hire our standard team of architects we’ve used in the past and ask the team do something WeWork-like,” Naratil said. “But the more we talked to the team at WeWork, the more we felt they had something extra to add.”