WeWork, the Manhattan-based communal office provider, launched its first Asia location in Shanghai this month as companies work to gauge the depth of demand for co-working space in Asia. The US$16 billion startup’s beachhead in the region opened for business on July 1 in the city’s downtown Jing An District, occupying the second and third floors of a newly renovated commercial building at the intersection of Yanping Lu and Wuding Lu.
The new venue marks the latest round in a battle for dominance in the highly competitive market for flexible office leasing or co-working in Asia, which is pitting US startups such as WeWork against traditional serviced office providers and homegrown market entrants from Asia.
WeWork Puts Chinese Spin on Shared Offices
The first Asia venue for WeWork sees the US co-working giant putting Chinese flourishes on its stylish workspaces. WeWork tweaked its Shanghai offering to cater to the desire for privacy among many Chinese users, breaking up most of the space into individual rooms and smaller spaces. The décor of the venue features signage greeting guests with “Nong hao” the Shanghainese greeting, written in Roman script.
Cofounder Miguel McKelvey told CNN that the company also debated installing a nap room in deference to the widespread local practice of having an after-lunch snooze, but decided against it after learning that Chinese workers are more comfortable snoozing at their desks.
The new workspace measures 2,600 square metres per floor and is located within a 15-minute walk of two metro lines, in an area that is becoming an enclave for foreign hipsters. WeWork representatives have said that the new centre is nearly fully leased, and the company is currently building out additional venues on Weihai Lu in Jing An district, and on Yunnan Lu near People’s Square.
Local Space, Imported Pricing
Dedicated desks at the Yanping Lu location start at RMB 2,900 (around US$434) per month, according to the company’s website. A private office for one person can be rented for RMB 3,300 (US$493) per month, and a nine-person office costs at least RMB 28,800 (US$4,307) per month. By comparison, desks at WeWork’s Manhattan facilities generally range from US$450-750 per month.
While WeWork’s China pricing is in line with what the company charges in Manhattan, it appears to be more expensive than other offerings currently available in Shanghai or other mainland cities. SOHO China’s 3Q platform, which offers co-working space at 16 facilities in Shanghai and Beijing, charges RMB 2440 per month for a dedicated desk at SOHO Exchange in Jing An district, a location within two blocks of some of the cities priciest office towers.
Established local competitor Naked Hub offers membership packages maxing out at RMB 3,000 (US$449) per month – which includes use of a gym with showers and massage room, with local competitors and new entrants such as Jack Ma-backed KrSpace, and startup UrWork also competing in the market.
Co-Working Comes to Asia
The global surge of interest in co-working spaces is driven by a startup boom and younger workers demanding urban, communal office environments. According to a 2015 survey reported by Deskmag.com, there are about 7,800 co-working spaces worldwide hosting some half a million workers. A more recent report on the website predicts that some 10,000 co-working spaces will be operating by the end of 2016.
WeWork, which debuted in the U.S. in 2010 and quickly became Manhattan’s biggest occupier of office space, has since expanded to Canada, Europe, and Israel.
Now the company appears to be setting its sights on rapid growth in Asia. WeWork said it plans to open locations in Hong Kong during the second half of this year, and is also slated to expand into Seoul, Sydney and India. In March, WeWork raised approximately US$430 million in a financing round led by Beijing-based Legend Holdings and its private equity arm Hony Capital.