WeWork dusts off deals as it re-emerges into the leasing market

WeWork was originally looking at the 20,000 square metre office space being developed by Mirvac at 55 Market Street, Sydney and it has been suggested the property team could be dusting off plans for about 5000 square metres at the site.

It comes as the operator hit headlines last year when its founder and chairman Adam Neumann stepped down and the planned public float was canned. It recently appointed former oil executive Kimberly Ross as its new chief financial officer, in another change to the company’s leadership team as backer SoftBank Group attempts to turn the company around.

Lachlan Buchanan, head of real estate – WeWork Australia and New Zealand, said the core business in Australia is incredibly strong and “we remain committed to our continued success locally”.

“Local growth has always been disciplined, organic and demand driven and we are continuing to prioritise this strategy in 2020. Rather than a ‘build it and they will come’ approach, we’ve always underwritten new buildings based on demand. We’re on track to maintain our market share this year and are laser focused on delivering unparalleled member experience,” Mr Buchanan said.

“Co-working is on the rise so we are in an industry with enormous opportunity. WeWork is continuing to challenge the typical expectation of office space by reinventing the way people work through technology, community and flexibility.”

WeWork operates about 23,000 square metres of space in Melbourne. Leasing data circulated to industry sources, seen by The Age and The Sydney Morning Herald, suggests occupancy levels are around 90 per cent at its sites, effectively operating at capacity.

Mark Rasmussen, Savills Australia’s state director of leasing in Melbourne, said demand from co-working providers for space in the city’s centre was “more than steady: it’s strong.”

“Both landlords and the co-working sector are keen to do deals,” Mr Rasmussen said.

“Large corporations looking to move office or expand staff and operations with new leases were focusing on landlords with a co-working provider in their building before they decided to commit.”

In Sydney WeWork has opened new premises at 1 Sussex Street and plans to open 320 Pitt Street in Sydney and 260 Queen Street in Brisbane and a new site in Auckland, New Zealand next year.

Leasing agents have confirmed they have been approached by WeWork for new office space opportunities in Sydney and Melbourne.

Co-working space remains in demand for CBD office markets with the listed Servcorp saying at its results last week that its underlying net profit before tax was up 47 per cent to $21 million.