WeWork opened its doors in Hong Kong for the first time on Thursday as the US co-working startup continues its expansion into Asia. The company’s initial foothold in the Asian financial centre occupies nearly 100,000 square feet (9,290 square metres) across eight stories at Phoenix Properties’ newly redeveloped Tower 535 commercial complex on Jaffe Road in Causeway Bay. WeWork’s Hong Kong debut in the grade A office tower comes just two months after the New York-based flexible office provider opened its first Asian location in Shanghai.
“There has been a great deal of activity around entrepreneurship and innovation in Hong Kong in recent years,” Henek Lo, WeWork’s General Manager for Hong Kong, Australia and Korea said earlier about the company’s expansion into the city. “In Hong Kong — and around the world — a shift is taking place in how and why people work. People want to find meaning in what they do by seeing ideas come to life, creating their own path, and benefiting from the power of working in a community.”
WeWork has said that it plans to host 1,400 tenants, or what it calls members, at this initial Hong Kong location. Founded in 2010, the company is now Manhattan’s biggest occupier of office space and has 100 locations in 28 cities. WeWork, which is valued at $16 billion, signaled its intent to expand into Asia when it raised $430 million in a funding round led by Beijing-based Legend Holdings and its private equity wing, Hony Capital.
The company has already announced plans to open second locations in both Hong Kong and Shanghai with the latter scheduled to begin operations November 1st, at 696 Weihai Lu, a one-time opium warehouse and former artist’s commune that has been redeveloped for commercial use. The second Hong Kong facility, which will hold up to 800 members, is planned for the Asia Orient Tower at 33 Lockhart Road in Wan Chai, but WeWork has yet to reveal an opening date.
WeWork Dives into a Crowded Asian Market
While Wework pioneered the co-working concept in the US, as was the case with many American tech startups, the company arrives in Asia to find that local players have already adapted and introduced the same product on this side of the world. Already, agency research indicates that Hong Kong is home to 40 co-working facilities, while Shanghai is home to around 45 such shared working spaces.
Most of these co-working players are domestic companies such as local Shanghai operator naked Hub, run by naked Group, which developed the highly successful naked Retreats resort chain, and SOHO China’s 3Q co-working chain. SOHO 3Q already has 16 co-working facilities in Shanghai and Beijing, while naked Hub has established five centres in Shanghai, with a target of opening nine new locations in the city this year.
In Hong Kong, WeWork is up against leading developer Swire Properties’ blueprint, which announced it will be relocating to a 30,000 square foot (2,800 square metre) facility on the day before WeWork’s launch, as well as a number of smaller, independent co-working space operators.
Overall, the amount of co-working space coming online in Hong Kong is expanding rapidly as operators fight for market share. Colliers International estimated in a recent white paper that “flexible working operators will take up at least 475,000 square feet (44,100 square metres) of office space in Hong Kong in 2016,” with that space exceeding the amount leased in 2015 by mainland Chinese firms — last year’s big new occupiers — by more than 20 percent.
HK Co-Working Demand Driven by Startups
The number of startups has grown significantly in Hong Kong during the past few years with 1,558 being accounted for in 2015. The increase in startups corresponded with an increase in co-working space in the city after only three locations were officially registered in the city in 2010.
A survey last year by Hong Kong startup portal Startmeuphk, found that 1,558 startup businesses had chosen co-working, incubator or accelerator facilities to house their operations – an increase of 46 percent from the previous year.
With office rents in Hong Kong being the highest in the world and vacancy levels remaining relatively low, these startups gravitated to co-working spaces that offered an affordable alternative. Most facilities have both fixed desks and private offices available. At WeWork Hong Kong’s location, prices for a fixed desk start at HK$6,990 ($901) per month while a one person private office costs HK$7,800 ($1005) per month.