WeWork, the Manhattan-based office sharing startup is expanding into Asia with its first location currently preparing to open in Shanghai’s Jing An District.
Recently valued at $16 billion, the leader of the co-working phenomena is now busy implementing the first of $780 million in venture funding that it raised from China’s Hony Capital and its parent firm Legend Holdings, to fit out two 1,600 square metre floors on Yanping Lu in Shanghai, at the intersection with Wuding Lu.
Mingtiandi took a tour with WeWork representatives last week to find out how the US firm hopes to conquer Asia, and to judge for ourselves whether co-working can catch on with occupiers on the mainland.
Staking a Claim in Shanghai’s Hipster Central
The new WeWork premises, which are still being fitted out, take up the 2nd and third floors of a newly renovated commercial building in an area of the downtown Jing An district that has rapidly been growing in popularity with Shanghai’s expatriate hipsters.
In keeping with this setting, the WeWork representative who showed the premises to Mingtiandi told us that the majority of the tenants leasing there were expatriates, with the space, which is due to open in June already said to be 60 percent leased. According to WeWork’s salesperson, the new centre had only started leasing two weeks before, with tours for prospective clients available only by appointment on Tuesdays and Thursdays.
The company said that it anticipates that its Chinese members will have different demands than what the company has experienced in the US, where it specialises in offering shared spaces in open-plan facilities.
Giving Tenants Some Privacy
To adapt to the China market, the WeWork facility which we toured, is broken mostly broken into individual rooms and other divisions, similar to traditional serviced offices such as Regus, as the company said that it expects Chinese tenants to want added security and privacy.
WeWork’s Yanping Lu facility, which it expects to be the first of many in the city is scheduled to be open in June. However, judging by the state of the interior construction, the office leasing expert who viewed the premises with Mingtiandi estimated that August might be a more realistic date, given the need for the contractors to install and have inspected an interior staircase linking the two floors of the facility.
The company has said that it plans to open Hong Kong during the second half of 2016, and also has plans to open in Seoul, Sydney and India.
In Shanghai, WeWork plans to offer hot-desking, dedicated desks and private rooms as its primary services, with a membership that allows occupiers to use any of the company’s facilities being offered as an added value option.
While WeWork has been tweaking its product to fit local expectations, its pricing may have been imported more directly from its Manhattan HQ.
Prices for a desk in the Yanping Lu facility will range from RMB 2900 to RMB 4000 per month, Mingtiandi was told. Local developer SOHO China, which introduced its SOHO 3Q platform last year, currently offers desks in its own co-working centres for under RMB 2000 per month, with 10 locations currently operating in Shanghai and Beijing.
Joining a Crowded Co-Working Space
Just as US startups such as Groupon and Uber entered China to find a squadron of local players running businesses closely based on their business models, WeWork will find itself competing against a number of local companies offering shared office products.
In addition to SOHO 3Q, Carlyle graduate Gavin Lu is developing the Uban shared office platform and former China Vanke executive Mao Daqing has raised more than $31 million in venture funding to launch UrWork. (Continuing the pronoun+work theme, Shanghai also has a co-working centre named YouWork).
Other entrants in the co-working gold rush include Jack Ma-backed KrSpace, which recently raised venture funding and the naked Hub co-working space in Shanghai being developed by the creators of the popular naked Retreats in Moganshan.
Naked Hub already seems to have copied an important element of WeWork’s business model by including beer kegs for Friday afternoon happy hours. Perhaps hoping to pre-empt this copycat alcohol offering, WeWork’s Yanping Lu location is being built directly above a brew pub which is likely to open before the co-working facility.