WeWork to open offices in four regional cities as part of Asian push

Locations in Jakarta, Kuala Lumpur, Bangkok and Manila to be ready by end-2018

Singapore

US-BASED co-working space provider WeWork plans to open offices in Jakarta, Kuala Lumpur, Bangkok and Manila by end-2018, as part of a US$500 million effort started in August last year to grow in South-east Asia and South Korea.

That continues WeWork's pattern of aggressive expansion in the region. Industry watchers say that in seven months, WeWork has opened, confirmed or been in talks for over 300,000 sq ft of space in Singapore.

Singapore will act as WeWork's regional headquarters, WeWork's managing director for South-east Asia Turochas "T" Fuad said in a recent interview.

"Singapore has always been the gateway to South-east Asia for a lot of multinational companies and small and medium enterprises," Mr Fuad said. "It's a financial hub and a hub for entrepreneurs and startups, so it's a natural starting point."

WeWork is in the process of selecting locations suitable to its target of freelancers, startups and large companies.

In South-east Asia, it will also pay particular attention to courting enterprises which may like WeWork's ability to allow them to scale up and down flexibly and get workspace without high upfront costs. Globally, companies with at least 1,000 employees around the world represent a quarter of WeWork's total membership.

Mr Fuad declined to comment about its strategy for expansion in South-east Asia outside Singapore.

The company entered the region in August 2017, when the US$500 million effort was announced, by acquiring Mr Fuad's co-working startup Spacemob and its offices in Singapore and Jakarta.

WeWork opened a space in Beach Centre in December 2017, which has 700 desks and is "very full," Mr Fuad said. Another location at 71 Robinson Road will open in the second quarter with 1,000 desks.

WeWork will open a location at 22 Cross Street in the third quarter as well as at 60 Anson Road. He declined to reveal the sizes, but according to a previous Business Times report, WeWork will take up about 20,000 sq ft at 60 Anson Road. It will also lease 40,000 sq ft in the Funan integrated development, which is set to be completed in end-2019.

Mr Fuad was silent on previous BT reports that it is in talks for four floors - totalling 60,000 sq ft - at 8 Cross Street and the top two floors - at 30,000 sq ft - of Suntec Tower 5; or that it has reportedly signed up for 34,000 sq ft at City House in Robinson Road.

The company will face co-working landscapes that are generally fragmented and dominated by local players, according to data from Cushman and Wakefield.

In Jakarta, it estimates that 18 players currently occupy up to 626,000 sq ft, and in Kuala Lumpur, seven providers occupy 150,600 sq ft.

International competition is also closing in. Regus, owned by London-listed IWG, has 107,000 sq ft of space in Manila, while Singaporean JustCo has two spaces of close to 80,000 sq ft in Bangkok.

Other challenges for players regionally include the lack of quality stock and cheaper rents, which can dampen the market's enthusiasm for such spots, said Sigrid Zialcita, managing director for Asia Pacific research at Cushman and Wakefield.

"To a large extent, a co-working centre's success depends on the success or failure of its members, she said. "In emerging South-east Asia, most who make use of co-working spaces still largely consist of startups and freelancers, where failure rates remain high."

In Singapore, she said WeWork's edge lies in its ability to build a community. This is "also multiplied with a larger scale to leverage on network effects".

Mr Fuad believes WeWork's global brand and network will help widen the gap between itself and competitors in the region.

"In a changing and fragmented market, we don't see ourselves as just a space provider, but also a global platform to help our members go beyond just making a living," Mr Fuad said.

One example is a private social network for members to post updates and connect with WeWork's 210,000 members in 71 cities across the globe.

Another way WeWork believes it is different is its "Powered by We" service which allows it to manage space for other businesses. He said WeWork has had "very healthy conversations" here with multinationals about potentially bringing the service to them.

"These companies realise the way of work is changing and how people are hiring is changing," he said.

"Millennials are not looking just to work for large brands, and companies want to know how to solve that and hire them."