Co-working pioneer WeWork made global headlines a year ago when it opened in Shanghai, marking the first foothold in the world’s second largest economy for the $20 billion co-working company.
But it didn’t take long for China’s local players to develop an answer to the US challenge.
In an exclusive interview with Mingtiandi, Mao Daqing, founder of Beijing-based co-working startup URWork, has revealed plans to take on WeWork on its home turf by opening his company’s first US centre in New York later this month.
URWork Aims for Global Presence
Fueled by its own $1.3 billion valuation and backing from mainland VC heavyweights Sequoia Capital China and Zhen Fund, URWork is landing in New York with plans for more centres in the US and elsewhere.
“[We] will soon announce a partnership with our New York partner,” Mao said. “We are still identifying opportunities in other overseas markets with the UK and US on top of our radar.”
Mao did not divulge the location or other details of the planned New York centre, which follows the soft opening of the two-year-old company’s first overseas location in Singapore last month.
Beyond taking on WeWork in Manhattan, the former Vanke executive turned entrepreneur confirmed URWork’s plans to open its second US facility in Los Angeles in the fourth quarter of this year, and the company is reported to be eyeing launches in London and Taiwan. Mao commented that “we haven’t got anything substantial to announce” for those locations yet.
In all, the startup is targetting 100,000 seats across 160 new locations in 32 cities worldwide over the next three years.
Chinese Startup Says It’s Ready to Compete
URWork will likely apply lessons from its rapid growth in China as it builds up a presence overseas. When asked what differentiates his company from its mainland challengers, Mao points to several “distinctive advantages” including URWork’s ability to “revitalise the vacant commercial real estate spaces,” its “Internet and digital acumen” in creating high-tech platforms for its users, and its franchising prowess that has enabled the company to make the leap to foreign markets.
Piles of cash don’t hurt either. The New Space merger brought URWork’s total valuation to a reported RMB 9 billion ($1.3 billion), making it the first Chinese “unicorn” in the sector. In addition to Sequoia and Zhen Fund, the company is backed by a roster of investors that includes Sinovation Ventures and Tianhong Asset Management, a fund affiliated with Alibaba’s Ant Financial.
URWork now has a network of nearly 100 centres across China, covering about 7.5 million square feet of space following its strategic merger with rival New Space in May. The platform serves 3,000 enterprise users and 40,000 individual members.
After landing in New York, URWork will be facing a crowded market. The shared office industry in the US is dominated by WeWork and Luxembourg-based Regus, which together account for nearly 80 percent of the 27 million square feet of co-working or serviced office space leased across the country, according to a 2016 report by property consultancy JLL. New York and Los Angeles are the largest and third-largest markets for shared office space, respectively.
Founded in New York City in 2010, WeWork has 40 locations in the city, including 35 in Manhattan, according to its corporate website. The startup also has 14 addresses in LA.
Planting a Flag in Singapore
Back in Asia, URWork’s first overseas centre is located at Singapore’s JTC LaunchPad @ one-north, a facility for startups and incubators. The mainland firm has teamed up with Collective Campus, an Australian startup accelerator, to set up the 118-desk centre that also includes 14 private studios, six meeting rooms and a multi-function hall. Mao says the center is over 40 percent occupied in the run-up to its formal launch this month.
URWork is also partnering with International Enterprise Singapore, an arm of the country’s trade ministry, and property giant CapitaLand on the rollout. “I wanted to create a comprehensive platform to facilitate the bilateral exchange and learning between China and overseas countries – with Singapore as the first stop,” says Mao.
The entrepreneur, who has a PhD from Peking University, started his real estate career in Singapore with senior roles at sovereign wealth fund Temasek Holdings and CapitaLand before joining mainland residential builder Vanke in Shenzhen. At CapitaLand, Mao led projects including Beijing Raffles City and the expansion of the Ascott serviced apartment brand in China.
Setting up URWork’s first overseas location has its share of challenges, despite Mao’s Singapore knowledge. “It’s always bit of testing the water in the initial market-entry phase,” Mao says. “The market evolves incredibly fast and Singapore is certainly not what I perceived it to be when I first came here in 1993.”
URWork to Battle WeWork on Multiple Fronts
Even as it sets up a foothold in the US, URWork is competing in a cutthroat market in China, where more than 500 co-working sites have been set up since July 2015, according to research from JLL.
The company’s New York-based rival WeWork is also challenging URWork in its home court. The $17 billion unicorn that now has 193 locations in 50 cities worldwide, has opened three centres in Shanghai and more in Beijing and Hong Kong while building up its regional management team. WeWork also plans to bring its platform to Singapore’s heated co-working market, as Mingtiandi reported in May.
“Shared working spaces are hard to achieve profit if solely relying on government tax reduction or desk rental to cover up the operational cost,” Mao comments. “I foresee a good amount of strategic partnership and merger, which will see smaller players being filtered out and replaced or merged into sizeable, influential players.”