Global flexible workspace provider WeWork Inc on Tuesday disclosed “substantial” doubts about the company’s ability to continue as a going concern citing its losses, projected cash needs, increased membership churn and prevailing liquidity levels. This is raising concerns about the impending impact on the brand’s India branch and the prospects of the overall flexible workspace market globally.
WeWork India is currently present in 40-plus locations across seven cities in India, with nine properties in Bengaluru alone. “Since inception, WeWork India has been backed by the Embassy Group who holds the majority stake and control to run and operate WeWork Global’s business in India,” said WeWork India chief executive Karan Virwani, adding that any development globally has no impact on the brand’s India business.
“WeWork India is an independent entity with WeWork Global being a small shareholder. Hence, this should not impact the India story at all,” seconded Utkarsh Kawatra, a senior director at flex workspace solutions provider myHQ which is affiliated with property consultancy Anarock.
As per company statement the Embassy Group holds a 73% stake in WeWork India with parent WeWork Global enjoying the remaining 27%.
Speaking about the parent company’s challenges amid a positive growth story for the flex market globally, co-founder and chief executive of Bengaluru-based managed office space provider UrbanVault said: “WeWork has been overleveraged since day 1, with high spending in brand building.”
Others blamed the company’s initial property acquisition spree, expansion without testing out markets and eventual leadership troubles.
The New York-headquartered company, which was once valued by SoftBank at $40 billion, is currently fishing for a permanent chief executive to lead the company out of troubled waters, following former CEO Sandeep Mathrani’s exit in May.
WeWork Global reported a net loss of $696 million in the six months ended June 30, 2023. Its consolidated real estate portfolio consists of 610 locations across 33 countries.
However, while WeWork is a major player in the kitty of a handful global players in the flex segment, the field continues to be dominated by local players across the globe, explained Arpit Mehrotra, Managing Director, Office Services – South India & Head of Flex, Colliers India.
As for the domestic landscape, the flex space market appears to be one of the brightest stars in the commercial realty galaxy. According to a July 2023 report of real estate consultancy JLL, India’s operational flex stock is set to double to 106 million square feet over the next five years. The segment witnessed a record high demand within the office space bracket during the January – June period this year at 26%.
“This all-time high demand may lower in coming times, but the growth trajectory for the segment remains upward,” noted Vivek Rathi, who heads research at property consultancy Knight Frank India.
“Coworking spaces demand weakened considerably after Covid-19 disrupted the workplaces equation across the country. We’re seeing a decisive reversal of this negative trend now, with coworking particularly attractive because of the disrupted IT/ITeS employment scenario,” explained Kawatra.
(Published 09 August 2023, 21:34 IST)
