The downfall of American co-working titan WeWork has prompted a renegotiation of substantial leasing agreements in Australia, a report in The Australian said.
Local heavyweights in property management are eyeing opportunities to broaden their flexible workspace solutions following WeWork's Chapter 11 bankruptcy announcement in the United States.
WeWork’s collapse has sent the stability of the co-working sector, already beleaguered by the pandemic and onerous rental contracts, into further uncertainty.
The co-working leasing model, involving long-term head leases with sublets on shorter terms, has been typical for WeWork and its counterparts around the world.
Yet, Australia's major office landlords, including Dexus, Lendlease, GPT, Charter Hall, ISPT and Centuria, are considering enhancing their flexible workspace offerings as WeWork revisits its leasing strategies and scales back.
Landlord-driven workspaces
Urban Collective general manager Laura Dawson said this shift toward landlord-driven workspaces had gained traction, particularly in the last year.
“It’s interesting times in our industry,” she said. “We are landlord-owned and WeWork’s problems are almost proof that we are heading in the right direction.”
In October, Urban Collective opened three levels after a $12 million investment by the owner, JX Capital, into the Big Bear Shopping Centre lifestyle precinct in Neutral Bay, Sydney.
It has signed up more than 50 new members, which Dawson said “seems to be the direction things are moving”.
“There’s been quite a few of these landlord flexible space models pop up, especially in the last 12 months.
“There’s an added level of security for tenants rather than the sublease model,” she added.
WeWork committed to Australia
Despite the Chapter 11 proceedings, WeWork asserts its ongoing dedication to its Australian operations, which have been engaged in protracted lease discussions with local landlords.
As it stands, WeWork's Australian presence has diminished following the closure of several properties and ongoing negotiations to reduce leases in prime locations like Perth's Central Park Tower and Sydney's Daramu House.
The flexible workspace sector has experienced significant upheaval due to the COVID-19 pandemic and the surge in remote working, leading to the collapse of operators such as Victory Offices.
Scare-mongering
Nevertheless, for some, including RiskTalk director and founder David Press – whose office is in WeWork’s Central Park tower in Perth – there has been “too much scare-mongering” over WeWork’s problems.
“I’ve had emails saying if you’re a WeWork member we have space available,” he said.
“It has been going on since the WeWork bankruptcy was leaked, so about a week ago.”