TikTok ban puts brake on parent ByteDance’s India office space expansion plan – ET RealEstate

TikTok parent ByteDance’s move to lay off employees, following its permanent ban in India, has effectively shuttered the Chinese company’s office expansion plans here.

The company is unlikely to go ahead with its plan to occupy big space in Mumbai’s Goregaon suburb as committed in July, right in the middle of the pandemic and uncertainty over its future in the country, said people with direct knowledge of the development.

The Beijing-headquartered company had entered into a flexible office space deal for 1,250 seats at WeWork India’s Nesco property in Mumbai’s Goregaon suburb last year.

The company was expected to occupy this office this month.

However, it has not taken charge of the space and not even intimated WeWork India about any plan to do so.

“While WeWork India has already completed the interior and fitouts for the Internet technology company’s contracted space, there is no certainty that the latter would go ahead with the deal,” said one of the people.

The deal for the Mumbai office was struck last year with a plan to use the same for expansion and consolidating some of its operations here.

The agreement factors a lock-in period until the end of 2022.

ByteDance and WeWork did not offer any comment for the story.

Apart from this proposed office set-up in a co-working hub in Mumbai, ByteDance also has two operational offices in Bengaluru and Gurgaon through a similar arrangement with WeWork India and these would also be up for review.

The company supports some of its overseas operations from these offices.

According to industry experts, any move to cancel the plan to occupy the space will have legal ramifications too if the service provider decides to exercise his rights in the backdrop of financial losses.

“If a contracted entity does not go ahead with occupancy of the leased space, the company will have to make payment of rentals for the lock-in period. Forfeiting the deposit amount is an option, but that is usually equivalent to 4-6 months’ rent. This may then get resolved through an arbitration mechanism,” said a senior official of a co-working company.

According to realty industry experts, ByteDance was looking to expand its presence in Mumbai, Bengaluru and Gurgaon following the exponential growth of its TikTok app.

However, the India-China standoff has slowed decision-making on the real estate front.

ByteDance’s TikTok, Vigo Video and Helo were among 59 Chinese apps that the government banned on June 29 citing national security concerns.

The temporary block has now been converted into a permanent ban.

ET has already reported that the Chinese Internet company has started the process of laying off employees in India following this permanent ban on its most popular apps TikTok and Helo last week. As many as 800 people out of the 2,000-plus workforce may lose their jobs, while around 100-200 employees supporting global teams or in critical roles may stay. Its plan about the rest of the employees is not known.

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WeWork India opens 1.65 lakh sq ft space in Embassy Manyata NXT in Bengaluru – ET RealEstate

NEW DELHI: WeWork India has launched about 1.65 lakh sq ft flexible workspace in Embassy Manyata NXT building in Bengaluru. The location has capacity of over 3,500 desks.

Karan Virwani, CEO of WeWork India, said, “The new location is customised to fit the needs of all enterprises, SMEs, startups and entrepreneurs.”

It will be the first building for Commonwealth Bank of Australia, the company said in a media release.

The company recently leased out 1.5 lakh sq ft space to Microsoft in Noida and 15,700 sq ft of office space in Bengaluru to Khaitan & Co.

WeWork India currently has 34 centres comprising 60,000 desks across six major cities.

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WeWork aims to become profitable in 2021 globally: Sandeep Mathrani, CEO – ET RealEstate

NEW DELHI: Co-working major WeWork will focus on achieving profitable growth globally, including in India, in 2021 by increasing the occupancy level of its real estate portfolio, the company’s CEO Sandeep Mathrani said.

Further, Softbank backed-WeWork will revisit its plan to launch an initial public issue (IPO) only after it becomes profitable, said Mathrani, who became the new CEO in February after the exit of WeWork co-founder and former CEO Adam Neumann.

In a video conference, Mathrani said India is an important market for the US-based firm and has recently invested USD 100 million in WeWork India.

WeWork India’s contribution to global revenue is currently small but it will continue to rise as the country has great potential for flexible workspace business, Mathrani said.

Asked about WeWork’s top priorities for India, he said the global strategy is to achieve profitable growth through increase in occupancy level at all its centres.

“Our priority everywhere globally is profitable growth and streamlining our organisation and real estate portfolio in 2020,” he said, adding that in 2021, the company plans go towards having profitable growth and become EBIDTA positive.

Mathrani said the company has been able to reduce operating cost and cash burn significantly this year by streamlining the organisation and also its real estate portfolio.

The exercise of right-sizing organisations has been completed, while the streamlining of real estate portfolio is also 75 per cent complete, he added.

Mathrani said 65-70 per cent occupancy level is required for break even, which the company had achieved before the outbreak of COVID-19.

He noted that the pandemic has highlighted the importance of de-densification of office space and adoption of hub and spoke model.

He felt that India would benefit from this because of cost advantage.

Mathrani described the WeWork global investment of USD 100 million as a “strategic move” that shows its commitment to the Indian market. He mentioned that WeWork has sold its investment in its China business.

Asked whether the company has any plan to relaunch its public offer, Mathrani said the company is currently targeting to achieve profitable growth and positive cash flow, and then will decide the path forward.

“I am a big believer of we take one step at a time, we show profitable growth and then decide what the path forward is. Get to the cash flow positive and then decide,” Mathrani said.

In September 2019, WeWork had withdrawn its public issue that sought to value the company at USD 47 billion. The valuation reportedly dropped to less than USD 8 billion.

Karan Virwani, the CEO of WeWork India, said demand for flexible workspace has increased from large enterprises.

He said the share of large corporates in WeWork India centres has gone up to 67 per cent from 50 per cent but expressed confidence that small members would come back post pandemic.

WeWork India, which is owned by Bengaluru-based realty firm Embassy group, will not set up centres and then find clients, but it will prefer to take up clients and accordingly lease properties.

Virwani said the WeWork India has been able to reduce its cost by around Rs 250 crore.

WeWork India currently has 34 centres, comprising 60,000 desks and over 5 million sq ft area, in Bengaluru, Mumbai, Gurugram, Noida, Pune and Hyderabad.

Globally, WeWork has around 840 centres with 6.6 lakh membership.

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Co-working operators start witnessing fresh demand after five months – ET RealEstate

NEW DELHI: Co-working and managed workspace operators have started witnessing fresh demand after a five month disruption due to Covid-19 pandemic as leading co-working players have reported reaching 50 per cent fresh leasing levels in July compared to the monthly average during the pre-Covid times.

Covid induced lockdown had impacted the co-working operators the most as a Knight Frank study says that around 3.2 million square feet (MSF) of flexible space is expected to be vacated by these operators in 2020.

“We used to transact 1500 seats every month on an average but business was impacted severely due to Covid-19 pandemic. Now we are back to doing 1000-1200 seats in a month,” said Amit Ramani, Founder and CEO, Awfis.

There are over 250 co-working players operational in India but the segment is dominated by top 10 players which have cornered around 75 – 80 per cent of the market share in the top eight cities.

The Indian Workspace Association (IWA) has said that its members have reported reaching 50 per cent occupancy levels.

“We continue to see contractual occupancy of the industry in between 40-50 per cent of what we were witnessing in pre-COVID times. Various players are also offering innovative solutions to suit the evolving needs of occupiers amidst the pandemic,” said a IWA spokesperson.

IWA represents leading companies like Vorqspace, WeWork India, 91 Springboard, BHIVE Workpsace and Awfis, among others.

WeWork did not respond to a separate email query.

Paras Arora, Founder and CEO of co-working operator Qdesq said that they transacted 1100 seats in July.

“We were transacting 1800 seats in March, and we believe we will get back to the same number by October. There was an impact on revenue due to lockdown. April to June fell by 50 per cent. In July, we saw a 10 per cent month on month pick up,” said Arora.

Managed office space provider Skootr said that there has been a dip of close to 10-15 per cent in the leased area, but leads have started coming in again.

“For us, the impact has been limited being a purely managed office player. Our clients are primarily MNCs and large corporates which have been able to sail through these turbulent times slightly better than few other companies,” said Puneet Chandra, Co-founder and Director, Skootr.

However, some of the co-working operators are witnessing slow recovery and expect demand to improve with the opening of public transport.

“The recovery is quite slow , but I won’t say that the market is not picking up . We are confident that once public transport, especially the metro starts functioning again, the numbers will get much better.

Earlier, we used to be at 90 per cent occupancy but post-covid it has come down to 10 per cent to 15 per cent,” said Akshita Gupta, Co-Founder and CMO of ABL workspaces.

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