WeWork to launch at 21 Collyer Quay within next year
After restructuring its leases, coworking operator believes that its S-E Asian business could turn Ebitda-positive in Q2
Singapore
WEWORK is set to launch its largest location yet in Singapore - at the 21-storey former HSBC building at Collyer Quay - in the next nine to 12 months, Samit Chopra, the company's managing director for international strategy and operations, told The Business Times.
The coworking operator is also expecting to turn Ebitda-positive in South-east Asia, as well as in the overall Pacific region, around the second quarter, said Mr Chopra, who oversees the EMEA (Europe, Middle East and Africa) and Pacific regions. WeWork is targeting breakeven at the group level by end-2021 and could be looking at a listing via a Special Purpose Acquisition Company or a fresh funding round, media reports said.
"Last year, our focus was primarily on rationalising costs. This year, it's going to be on optimising. Now that we've reached a state of equilibrium in our portfolio, the focus, as the market comes back, (is) to drive occupancy up. We are starting to think about growth," Mr Chopra shared.
While declining to reveal specific occupancy numbers, he added: "I'm pretty confident that by the end of this year, we will already hit or exceed our occupancy levels that we had pre-pandemic in Singapore and across the Pacific."
WeWork's takeover of 21 Collyer Quay was previously announced in July 2019 by landlord CapitaLand Commercial Trust. CCT had then said that WeWork's lease for the property, which has a net lettable area of 200,000 sq ft, would start in Q2 2021 and last seven years.
But when WeWork's planned initial public offering collapsed later that year, some market watchers questioned whether it would still proceed with 21 Collyer Quay, BT reported previously.
Asked about the speculation, Mr Chopra said that 21 Collyer Quay remains very much key to WeWork's growth strategy, as one of the "trifecta" of its Central Business District properties - the other two being MYP Centre at 9 Battery Road and the more recently launched 30 Raffles Place.
Three floors of space are already in operation at 30 Raffles Place, and WeWork is set to open up six more floors, Mr Chopra said. Going by a Colliers report in October last year, the 30 Raffles Place branch has added 82,000 sq ft to WeWork's local portfolio.
To fill the fresh space, WeWork is specifically targeting the enterprise segment, with a design philosophy catered to Covid-19 requirements, Mr Chopra said. WeWork will commit 80 per cent of the 21 Collyer Quay space to the enterprise segment. "We do believe that this building would be especially attractive to large enterprise clients or Fortune 500 companies, where they could be taking one full floor or several floors, which we could customise for them," he said.
WeWork's continued growth in Singapore comes as the firm has been trying to turn around its losses. It named a new chief executive, Sandeep Mathrani, in February last year. Mr Chopra himself joined WeWork in mid-2020, taking over from then-South-east Asia and Korea managing director Turochas Fuad.
Formerly an executive vice-president at office space provider IWG, Mr Chopra is bullish on WeWork's turnaround potential. He expects that it can turn Ebitda-positive in South-east Asia, as well as in the broader Pacific region, around Q2 this year.
To make this happen, Mr Chopra kept busy last year restructuring WeWork's lease commitments. Examples of WeWork locations where leases were re-negotiated are The Brilliance Centre in Manila and South Quarter in Jakarta. The company declined to elaborate on the exact changes made.
It remains to be seen if the restructuring can significantly lift the financial showing of WeWork in South-east Asia. For FY2019 ended December, the entity WeWork Singapore Pte Ltd - which also had subsidiaries in Malaysia, Thailand, Vietnam and The Philippines - recorded a S$47.9 million net loss, steeper than the S$32.8 million loss a year ago.
Meanwhile, the revenue recorded by the entity more than tripled year-on-year to S$60.1 million in FY2019, with S$50.7 million coming from licence fee income collected from members. Mr Chopra declined to comment on the specific numbers, but said that one core revenue driver is "large enterprise clients who are signing multi year deals with us".
Covid-19 continues to spur growth, as SMEs and corporates shift to coworking spaces, he said. In June last year, WeWork enjoyed its best sales month with over 300 deals signed in the Pacific region, where it has over 70 locations in South-east Asia, South Korea and Australia.
This momentum is set to continue as WeWork rolls out more offerings, Mr Chopra said. In the next few months, for instance, it will launch On Demand, a pay-as-you-go service, in Singapore and Australia. "In 2021, we are looking to further consolidate our market position in Singapore and South-east Asia," Mr Chopra added.
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