US co-working giant WeWork has leased an entire grade A office building in downtown Shanghai, where the $20 billion startup will open its largest-ever shared office centre.
The take-up of the 27,000 square metre tower in the China Overseas International Center near Xintiandi surpasses other jumbo-sized leases by WeWork in New York and London, as corporate demand for flexible office accommodation continues to transform Asia’s office market.
A WeWork representative confirmed to Mingtiandi that the brand would open a location in the building, which is known in Chinese as 上海中海国际中心 (Shanghai Zhonghai Guoji Zhongxin), in 2018. The multi-year lease transaction was finalised earlier this month according to a statement by the developer.
Co-Working Giant Clinches Landmark Asian Deal
The newly completed, 10-storey building forms part of an 85,000 square metre project above the Madang Road metro station on lines 9 and 13. Located at the intersection of Madang Road and Jianguo East Road, a short walk south of the Xintiandi complex in Huangpu district, the property was developed by China Overseas Grand Ocean Group, a division of top-five mainland developer China Overseas Land and Investment (COLI).
The new venue will be the largest in WeWork’s sprawling global network, which currently totals 265 locations in 58 cities – topping a 220,000 square foot (20,439 square metre) space in an upcoming project in New York’s Brooklyn Navy Yard, and edging out a 280,000 square foot (26,013 square metre) lease in London’s Two Southbank Place.
While the Huangpu district lease is the largest transaction of its kind so far in Asia, it follows in the footsteps of similar deals in the region. Just over one year ago, WeWork leased almost an entire 11,000 square metre building near People’s Square in Shanghai, known as The Konnect, from Warburg Pincus-Backed KaiLong Investment.
This past September, Amsterdam-based co-working brand Spaces jumped into the Hong Kong market by leasing out the 20-storey Sun House building at 90 Connaught Road Central, where it will open the biggest flexible office hub in the district, covering 7,154 square metres.
Earlier this year, Shanghai-based startup naked Hub took up 16 floors of a newly-renovated office project in Hong Kong’s Sheung Wan district for a new centre there.
WeWork Doubles Down on Greater China
The landmark deal is a new milestone for WeWork, which established its first beachhead in Asia by opening a Shanghai centre in July 2016. Less than a year and a half later, WeWork has a network of five centres in Shanghai and three in Beijing, with four more locations in the mainland cities expected to launch early next year.
The Manhattan-based brand also operates two locations in Hong Kong and is said to be planning a third at Quarry Bay. Besides its pipeline of projects in China’s first-tier hubs, WeWork is also poised to venture into the country’s lower-tier cities, as the company told Mingtiandi it is eyeing potential locations in Hangzhou and Chengdu as well as Guangzhou and Shenzhen.
WeWork has raised $500 million for its China expansion from SoftBank Group and Hony Capital, as part of a $4.4 billion funding horde for its operations in Asia. The company is opening its first Singapore location, a three-floor venue called Beach Center later this week.
While co-working was first popularized in the US and Europe, companies operating in Asia’s dynamic economies have been quick to pursue flexible office options as corporations from a broad range of industries look for more efficient workplace strategies for their fast-growing teams.
WeWork says it has more than 1750,000 members globally, including over 1,000 enterprise members. Corporations that use its flexible spaces in China include Boston Consulting Group, Discovery Channel, and yoga clothing brand lululemon, as well as mainland firms ofo and Zhaopin.com.