From staggering highs to stuttering lows! The saga of WeWork, the once global leader in co-working spaces, and its maverick co-founder Adam Neumann, is the stuff that Shakespearean tragedies would nod their head in approval. From a peak of $47 billion in valuation a few years ago, the company came full circle when it filed for bankruptcy in the US on Monday.
What does it mean for WeWork’s India subsidiary, and more importantly, for the shared offices space business in the country? WeWork India CEO Karan Virwani wasted no time in clearing things up. “WeWork India is a separate entity from WeWork Global. The recent news around the potential bankruptcy and Chapter 11 filing in the US will have no impact on the members and stakeholders in India. Any development globally has no bearing on the operations of the business. In India, we will continue to operate and serve our members, landlords, and partners as usual.”
Virwani’s confidence stemmed from two factors — one, the Indian wing of WeWork is majority owned not by WeWork Global, but by the Embassy Group. The Bengaluru-based realty major holds 73 per cent of WeWork India, with only the remaining 27 per cent with WeWork Global.
The second is the factor that WeWork India has been making profit and expanding and had recently claimed that it was aiming at a revenue of Rs 1,800 crore this financial year.
Does that mean all is swell? Not quite, if you ask Jitender Ahlawat, founder and managing partner, HJA & Associates LLP. “Potential ramifications loom,” warned Ahlawat, adding, “WeWork Inc.'s bankruptcy may tarnish WeWork India's reputation and market perception. Undisclosed interdependencies between the two entities could present challenges. To address these, WeWork India should maintain transparency, communicate effectively, and reassure stakeholders about its autonomy and robust strategies for business continuity.”
Market players also believe the development could accelerate the popularity of the managed office model, compared to co-working. “The news will strengthen the managed office model against co-working, since managed office business provides more stability financially due to extended lock-in periods,” said Puneet Chandra, co-founder, Skootr. “Managed office space take-up in Q3 2023 continued to sustain with demand coming in from diverse sectors such as BFSI, technology, engineering & manufacturing and life sciences, among others.”
While WeWork’s fortunes are up in the air, market experts remain steadfastly bullish on the growth of the flexi office space business in India. Last year, one-third of the total office space leasing in the country was in the managed office space side. With more startups and more global players making a beeline to the country, this sector could see a further spike.
“The growth in the office segment in India is a testament to the ability to meet the evolving needs of businesses in a rapidly-changing world,” added Chandra, with their USP for companies to be asset-light and operate hassle-free.
