China has emerged as one of WeWork’s worst performing markets as a local operation once seen as critical to the office provider’s global growth suffers from ultra-low occupancy rates and is “bleeding cash”, said people with direct knowledge of the business.
The Chinese subsidiary, which last year was valued at $5bn in a dedicated funding round led by SoftBank and its Saudi Arabia-backed Vision Fund, has proven a drain on the company’s cash position. Occupancy figures recently reviewed by the Financial Times underlined the poor performance in several key cities in the country.
WeWork locations in Shanghai, where it has installed 43,600 desks, had a vacancy rate of 35.7 per cent in October. In Shenzhen, where the company has 8,000 desks, 65.3 per cent were vacant, while 22.1 per cent of the group’s 8,900 desks in Hong Kong sat unfilled. The company was also expanding in central China, with multiple offices in Xi’an. There, it suffered a vacancy rate of 78.5 per cent.