Last year was a controversial one for WeWork, but it is not planning to scale back its plans in Singapore, said the co-working space operator’s Southeast Asia managing director Turochas Fuad in an interview with CNA on Friday (Jan 10).
Once valued at almost US$50 billion, WeWork’s growth hit a roadblock in 2019 after it filed its prospectus for an IPO in August.
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Potential investors cast intense scrutiny on its finances – it lost US$1.25 billion in the third quarter of 2019 alone – as well as its leadership under former chief executive officer (CEO) Adam Neumann.
The 40-year-old stepped down from the CEO position in September 2019, following media reports of his hard-partying ways – including the use of drugs and alcohol – as well as eccentric claims that WeWork could resolve world hunger and end refugee crises.
The prospectus also confirmed Mr Neumann’s conflicts of interest with the WeWork business, such as the firm paying rent to him for operating out of several properties that he personally owned.
WeWork’s valuation fell to less than US$8 billion and its plans for an IPO were shelved.
In October, Japanese investment firm SoftBank – one of WeWork’s major investors – announced it was bailing the co-working operator out to the tune of US$9.5 billion, and in November, WeWork announced it was laying off around 2,400 employees worldwide as part of efforts to make the organisation more efficient.
“Has it been fun? Not really,” said Mr Fuad, who joined WeWork in 2017 after the American firm bought over Spacemob, a co-working operator he founded.
The “right-sizing” that WeWork went through last year was a global exercise that also affected Singapore and the rest of Southeast Asia, said Mr Fuad, though he did not say how many jobs were affected in the region.
“It’s never a fun exercise but it did make us stronger,” he said, adding that WeWork is now focused on “growing in a smart way”.
For example, while WeWork’s Southeast Asia operations are part of the firm’s larger global business, they are “self-sufficient”, with planning and strategies done locally.
Mr Fuad said he also believes WeWork has learned to increase profitability more quickly in the two years that it has been in Singapore.
One way is by signing on more large businesses.
According to Mr Fuad, companies such as Microsoft and GE make up more than 40 per cent of WeWork’s clientele worldwide. Indonesian conglomerate Sinarmas, which deals in mining and agriculture, is among the Singapore clientele.
“Even very traditional companies are looking at a new way of working,” he said.
EXPANSION PLANS
Mr Fuad stressed that WeWork has no plans to scale back its efforts in Singapore.
It occupies three floors at the MYP Centre along Battery Road, but will soon take up a total of 14 floors in the 28-storey building. And it will “continue to sign more leases and locate more buildings, and make sure we find the right ones”, he said.
The company has 12 co-working spaces in Singapore, nine of which are located in the Central Business District.
Its largest space is at Funan mall, where it occupies more than 6,500 sq m across three floors, serving clients like the Government Technology Agency of Singapore and Ministry of Culture, Community and Youth.
WeWork Singapore is in the process of expanding to more areas in Raffles Place, Alexandra Road and Collyer Quay.
Meanwhile, WeWork’s other businesses in the region, namely Bangkok, Ho Chi Minh, Jakarta, Kuala Lumpur and Manila, are “definitely on the right track”, said Mr Fuad.
“We’re still in the process of tracking, but they’re trending well and we expect them to hit the same kind of trajectory as Singapore,” he said.
Co-working spaces take up a significant amount of Singapore’s commercial space, with more than 200 locations run by about 100 operators, according to real estate services organisation Colliers International.
Last year, a report by Colliers found that co-working spaces had tripled in terms of area since 2015, taking up 3.7 million sq ft of commercial space in 2019.
The report noted that WeWork made up 22 per cent of the sector, with rivals IWG and JustGroup together making up another 29 per cent.
When asked how WeWork aimed to compete in an increasingly crowded space, Mr Fuad said its global presence was an advantage not many other companies shared.
WeWork currently operates out of more than 600 locations in 33 countries, he said, highlighting that this allows companies to expand to locations as varied as Japan and South Africa.
WeWork has also accumulated a decade’s worth of “art and science” in customising workspaces for its clients, said Mr Fuad.
“Aesthetically you can see that other companies can kind of follow and do similar things, but how we design our offices, what size, what usage, that’s all 10 years’ worth of data.”