Alibaba-Backed Kr Space Debuts in Hong Kong with 7-Floor Wan Chai Lease

Kr Space, the co-working spinoff of Alibaba-backed technology platform 36Kr, has picked Hong Kong for its first centre outside of mainland China, leasing seven stories in the One Hennessy office building in Wan Chai while it looks to open other locations in the city.

The new venue will be more than five times as large as mainland counterpart Ucommune’s upcoming centre in Sheung Wan. Kr Space is leasing floors 11 through 19 in the tower developed by Chinachem Group, scheduled to open next year, according to a South China Morning Post account.

The Chinese flexible office operator will pay about HK$6.6 million ($840,829) per month for its 83,000 square foot (7,712 square metre) Hong Kong foothold, which translates to over HK$80 per square foot. While Kr Space waits for the 21-storey tower to open for business, the co-working firm is eyeing other premises in Hong Kong with the hope of launching its first centre in the city within this year, according to Qian.

Kr Space Follows Ucommune’s Lead

“Money-making space and tenants are what a co-working operator wants. Clearly, Hong Kong meets both criteria. The vacancy rate is low in Hong Kong and there is room for rental increases,” said Sean Qian, vice-president of Kr Space, as cited by the newspaper.

One Hennessy is a redevelopment project kicked off by Hong Kong developer Chinachem in 2009. The building will offer over 300,000 square feet of commercial space including offices, shops and restaurants upon completion. Located at 1 Hennessy Road as its name suggests, the office tower is a 10-minute walk from the Wan Chai MTR Station.

The company is following in the footsteps of China’s biggest co-working space operator Ucommune, which leased a full floor at Grand Millennium Plaza in Sheung Wan for its first shared office centre in the city in January. The more modest 1,393 square metre (15,000 square foot) space was leased at a rate of HK$50 per square foot.

WeWork Wannabe Plans 12 Centres in 3 Months

The Kr Space executive also revealed the company’s plans to “be on the same level as WeWork in two to three years.” He noted: “We are hoping to attract top-notch companies in finance, technology and other sectors to become our tenants.”

In the mainland, Kr Space is adopting an expansion strategy that mirrors that of WeWork, the US co-working giant. The Beijing-based startup announced on Tuesday that it plans to open 12 centres across Beijing and Shanghai over the next three months. The new centres which total almost 100,000 square metres will yield over 10,000 workstations in areas such as the Guomao business district and Wangfujing in Beijing, and the Lujiazui financial district and Bund area in Shanghai, said the company on its Wechat account.

The co-working operator has added 20 centres with a combined area of 150,000 square metres to its portfolio in the first four months of this year alone. The rapid expansion came after the startup completed a RMB 600 million ($92 million) financing round in January, which brought its total funds raised to RMB 1.1 billion.

Since it was spun off from 36Kr in January 2016, Kr Space has secured investment from venture capital firms IDG Capital, China Minsheng Investment Management, Gobi Partners, Unity Ventures, Colony New Yangtze Fund, and Prometheus Capital, a fund established by Chinese tycoon Wang Jianlin’s son Wang Sicong.

As of the end of April, Kr Space has 40 co-working locations in ten mainland cities including Beijing, Shanghai, Hangzhou, Nanjing and Wuhan. The occupancy rate for its mature centres is 95 percent, according to the company.