Landlord giant pumps the brakes on WeWork expansion

“We are happy with our current exposure and have no plans to expand their footprint with us at this stage,” Dexus executive general manager office & industrial Kevin George said.

In Australia, WeWork has more than 10,000 members using fifteen locations across Sydney, Melbourne and Brisbane, with new locations in Perth.

WeWork launched in Australia in 2017 and its most recent deal was for 11,000 square metres of space at 320 Pitt Street, Sydney on a 12-year contract.

WeWork will also lease an entire building of more than 10,000 square metres in Sydney’s Barangaroo and is looking at about 22,000 square metres across an entire tower at 55 Market Street.

In Melbourne the co-working giant is eyeing off as much as half of a tower – around 15,000 square metres – in what was ANZ’s former headquarters.

But the business has hit a roadblock overseas with the founder Adam Neumann stepping down as chief executive to be non-executive chairman on Tuesday morning, Australian time, after an investor revolt over the now-shelved public float.

A WeWork spokesperson in Australia said “we will decline to comment for this story”.

Leasing agents say the issue has been that the company has expanded too quickly and at time when office vacancy in Melbourne and Sydney are at near-record lows and rents are at peak levels.

But as companies look for flexible space in a short period of time, demand remains high for this style of co-working model.

The sector accounts for about 20 per cent of the global office market and about 4 per cent in Australia. It comes in many guises from a small open space in a hotel lobby or shopping centre to the large tenancies of WeWork and its competitors.

Brad Krauskopf, chief executive of Hub Australia said there was still a huge movement towards people demanding flexible workplace requirements.

“I think what we have got here is a lesson in governance, growth, evaluations on private markets,” Mr Krauskopf said.

‘WeWork didn’t invent the industry, people have been providing flexible workspaces before WeWork came along and I think that is critical to understand. Watch this space there is going to be lessons a mile long to learn from this one.”

According to co-working space intermediary Office Hub, in a new report, a flexible workspace strategy is now considered a primary tool in “attracting, engaging and retaining employees in order to remain competitive in the present business climate”.

Knight Frank partner of office leasing NSW Aaron Weir said there had been no noticeable negative impact or concern in the market about the WeWork business.