WeWork reports quarterly loss of nearly $2.1 billion ahead of public listing – ET RealEstate

BENGALURU: SoftBank-backed office-sharing startup WeWork on Thursday reported a first-quarter net loss of $2.06 billion, as it was hit by restructuring charges while it prepares to go public through a merger with a blank-check firm.

WeWork said its business was recovering as more people returned to offices due to easing of COVID-19 curbs, after work-from-home arrangements last year weighed heavily on the company by reducing occupancy and increasing operating costs.

Total occupancy ticked up to 50% in the first quarter compared to 47% in the fourth quarter, the company said.

WeWork in March agreed to go public through a merger with BowX Acquisition Corp, a special purpose acquisition company, in a deal that valued it at $9 billion. SoftBank Group Corp said it would retain a majority stake in the company after the merger.

The company, whose attempt at an initial public offering in 2019 spectacularly imploded due to investor concerns over its business model and co-founder Adam Neumann‘s management style, said first-quarter revenue nearly halved to $598 million from a year ago.

WeWork said it had 490,000 members in the first quarter, compared to 693,000 in March 2020.

The company said it incurred restructuring costs of $494 million, driven by non-cash SoftBank stock purchases and a settlement with Neumann. It posted an impairment charge of $299 million partly due to an exit out of some real estate.

SoftBank and Neumann, WeWork’s former chief executive officer reached a settlement in February ending a legal battle that started in 2019 when SoftBank agreed to buy around $3 billion in WeWork stock belonging to Neumann and other employees, but later contested its obligation to purchase the shares.



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Office leasing in seven cities falls 48% in Jan-Mar: Report – ET RealEstate

NEW DELHI: Net leasing of office space fell 48 per cent during January-March across seven cities due to the COVID-19 pandemic, but demand for the flexible space from corporates has increased, according to Cushman & Wakefield.

In its latest quarterly report, property consultant Cushman & Wakefield said the net leasing of office space declined to 35,78,585 sq ft in January-March 2021 from 69,31,922 sq ft in the corresponding period of the previous year across seven major cities.

The flexible space leased by corporate clients increased to 15,523 seats during the first quarter of this calendar year from 10,690 seats in the year-ago period.

“A sharp jump indicates that occupiers are relying on managed space as a smart alternative in the current situation,” it said.

According to the data, the net leasing of office space in Mumbai plunged to 2,01,642 sq ft during January-March 2021, from 8,82,693 sq ft in the corresponding period last year.

In Delhi-NCR, the net office absorption fell to 4,28,469 sq from 15,97,003 sq ft.

The net leasing dropped to 17,24,456 sq ft in Bengaluru from 26,54,939 sq ft.

In Chennai, the demand for office space declined to 1,44,309 sq ft from 2,55,010 sq ft.

The net leasing in Pune, however, increased to 2,76,531 sq ft from 1,73,026 sq ft.

In Hyderabad, the net absorption went down to 6,24,321 sq ft from 8,91,613 sq ft, while Kolkata saw a fall to 1,78,857 sq ft from 4,77,638 sq ft.

Anshul Jain, managing director (SE Asia and India) of Cushman & Wakefield, said, “Since Q4 closed on a positive note for commercial real estate leasing business, the market was hopeful of a gradual return to business as usual. And, the immunisation drive carried out by the government added much-needed confidence.”

Unfortunately, the sudden spike in the number of COVID-19 cases paused the momentum the market had picked up, he said.

“Unless the government rolls out the vaccination drive for one and all, occupiers will continue to remain cautious and market activity is likely to remain muted till the beginning of the second half of 2021,” Jain added.



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Flexible workspaces to lease three million sq ft of space in 2021: Report – ET RealEstate

NEW DELHI: During 2021, flexible workspace operators are likely to lease about 3 million sq ft of space across the top six Indian cities, as operators are likely to focus on signing large enterprise-level deals and cut down on speculative centers, according to a recent report by Colliers India.

During 2020, flexible workspace operators leased about 2.9 million sq ft of space led by technology, and banking and financial services (BFSI) enterprises.

Flexible workspaces are here to stay, with their share growing in the real estate pie. Though 2020 was muted for the growth of flexible workspaces, markets like Bengaluru, Hyderabad & Chennai continue to drive demand. Further, enterprises are also driven by the desire to offer locational flexibility to some of their employees and functional departments. Thus, they are leasing desks in flexible workspaces closer to the employee’s home,” said Arpit Mehrotra, managing director, Office Services (South India) at Colliers.

Despite large workforces working from home, as of March 2021, top flexible workspace operators across the top six cities have about 65% of their seats already leased, signalling continued confidence in managed workplaces.

As corporate occupiers continue to be uncertain about long-term office leasing plans in 2021 and 2022 and are still re-assessing their office space needs, they are exploring leasing desks in flexible workspaces to avoid long-term capital expenditures, and to get more flexibility on their lease terms, the report said.

“Conversations for consolidations and hybrid models continue to pick up and anchor pricing benefits are up for grabs. Leasing will pick up by H2 and it is prudent to evaluate a short-term hybrid model across regions”, said Bhupindra Singh, managing director, Regional Tenant Representation (India) at Colliers.

The total flexible workspace stock in the top six Indian cities is almost 30 million sq feet, equivalent to 4.3% of total Grade A and B commercial office stock. Bengaluru leads the tally with a 37% share of the total flexible workspace portfolio, followed by Delhi NCR and Mumbai, with 18% and 14% shares respectively.

By 2022, flexible workspace stock is likely to account for 5.4% of the total office portfolio, led by demand for well-located, high quality and efficient flexible workspaces.

The flexible workspace sector remains fragmented and is dominated by operators of various sizes in terms of number of centres and total area occupied. According to Colliers, “there is likely to be consolidation in the market, mainly through smaller fragmented operators that are facing acute cash-flow challenges ceasing operations. Over the next three years, flexible workspace operators are also likely to acquire smaller players to ensure they have the geographic range necessary to support their enterprise clients’ distributed workforce.”

As occupiers focus on portfolio optimization through 2022, many are exploring ways to shift teams into multiple, smaller managed spaces than their existing large, consolidated offices or use flexible workspaces as a stop-gap arrangement until they relocate to entirely new offices. Occupiers are also likely to take up flexible workspaces near suburban residential catchments, providing their employees more conveniences and choices. Many of these existing centres are currently operating at 50-70% occupancy levels, the report said.



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315Work Avenue leases around one lakh sq ft workspace in Bengaluru – ET RealEstate

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BENGALURU: Coworking space provider 315Work Avenue has taken a total of around one lakh sq ft of office space on lease here to set up two new centres as it sees strong traction from large enterprises post the lockdown. These 2 Grade-A office space centres located at Koramangalaand Old Madras roadwill have around 2000 seats, it said in a statement.

The expansion comes at a time when companies see merit in setting up satellite offices across multiple locations to help people work nearer home and to enable a distributed workspace model, it said.

The company currently manages 15 workspaces with around 12,000 seats across multiple prime locations here.

315Work Avenue plans to beef up its total portfolio to 25,000 seats this year with a focus on south and west India, while further strengthening its presence here.

Founder, 315Work Avenue, Manas Mehrotra said in the current situation, taking a conventional office space is becoming challenging for companies, and most of them are looking for flexible office spaces, and thus safeguarding them from capex cost, longer lock-in terms and huge deposits.

“Corporates and large enterprises too will avoid high capital expenditures and look towards flexible working spaces to expand business. Moreover, the pandemic has highlighted the importance of de-densification of office space and adoption of hub and spoke model,” he said.

According to a Savills India report, leasing activity by coworking operators is expected to increase by 42 per cent in 2021 over 2020, and the share of coworking space take-up in overall office leasing activity is poised to rebound to a 15 per cent share in 2021, similar to the 2019 level, the statement said.

Bengaluru and Hyderabad continue to see maximum traction of the total leasing activity in the coworking segment, it was stated.



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