WeWork is planning to triple its number of locations in Hong Kong to at least 18 within the next two years, Alan Ai, general manager of WeWork Greater China, said at the opening ceremony of the flexible office provider’s first centre in the city’s Kowloon area on Friday.
The event marked the debut of the New York-based firm’s sixth location in the city in Sun Hung Kai Properties’ newly-launched Two Harbour Square office building in Kwun Tong, after opening its first Hong Kong centre at Phoenix Property Investors’ Tower 535 in Causeway Bay in September 2016.
The rapid expansion of the flexible space provider’s facilities in the world’s most expensive office market come as WeWork is reported to be in talks with SoftBank over a share sale that could see the Japanese venture capital investor pay up to $20 billion to take control of the eight-year-old firm.
Bringing High-End Co-Working to Kowloon
WeWork’s new site occupies the top two floors of Sun Hung Kai’s 26-storey grade A office building at 180 Wai Yip Street in Kowloon East. The 60,000-square-foot (5,574 square metre) location provides over 900 desks and offers its members and visitors a view of Hong Kong island from an outdoor terrace. Since its unofficial opening in late September, the new site has attracted local jewellery maker Chow Tai Fook and a variety of tech startups as tenants, according to WeWork.
“We look forward to partnering closely with different partners to unlock the unique potential of Hong Kong and create synergies with other cities to drive economic development of the Greater Bay Area,” WeWork’s Ai said at the event.
WeWork spreads its 900 seats in the location across hot desks, dedicated desks and private offices as well as conference rooms and the communal areas offering ping-pong tables and local design elements that keep the offices edgy. The private offices are able to accommodate up to 60 person teams.
Two More Hong Kong Locations in the Pipeline
In addition to the Kowloon project, and its locations at Tower 535, Mass Mutual Tower and the LKF Tower, WeWork opened a location in Cityplaza Three in Taikoo Shing in August.
With the vision of opening over 12 more centres in Hong Kong in the next two years, the company say it has two new locations in the pipeline that are set to launch by the middle of next year.
Last week WeWork was reported to have leased another 80,000 square feet of space across Hong Kong developer Hysan’s Lee Garden One and Hysan Place, in the city’s Causeway Bay area.
The Kowloon lease with Sun Hung Kai was originally signed by naked Hub in January this year before WeWork acquired the Shanghai-based firm in April for a reported $400 million.
WeWork’s opening in the top floors of Two Harbour Square makes it the new neighbour of Singaporean banking giant DBS, which leased 20,000 square feet across the 3rd to 10th floors of the building in April this year.
Fast Expansion Brings New Challenges
WeWork’s growth in Hong Kong comes as part of an expansion that saw the New York firm leasing 265,000 desks in 287 buildings worldwide by the middle of this year. However, this rapid growth in available stock also brings WeWork significant financial challenges.
According to local real estate websites, monthly rents at Two Harbour Square average around HK$3 ($3.97) per square foot, which means the co-working operator could be on the hook for a long-term lease requiring payments of around HK$1.8 million per month. WeWork charges its Hong Kong-based members rates from HK$3,500 per month for a hot desk in Wanchai’s Mass Mutual Tower to HK$8,990 per month for a seat in a private suite at the LKF Tower in Central.
At the Kowloon opening ceremony WeWork’s Ai refused to comment on when the new centre might become profitable, saying that the private company doesn’t disclose this type of financial data.
However, financial statistics revealed via a WeWork bond sale earlier this year shows that the company lost $723 million in the first half of 2018, expanding from a $154 million loss in the same period last year.