Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

WeWork dumps about fifth of coworking space, in breach of leases signed with major Hong Kong landlords

WeWork dumps about fifth of coworking space, in breach of leases signed with major Hong Kong landlords

New York-based company has given up two floors in Hysan Place in Causeway bay and six floors in Sun Life Tower in Harbour City in Tsim Sha Tsui. Analysts say landlords Hysan Development and Wharf have burned their fingers, can’t chase WeWork for compensation

WeWork, the US real estate firm, is returning about 20 per cent of its Hong Kong premises to their owners, as start-ups, small enterprises and other short-term tenants failed to take up its offering of shared working space in the city.

It has given up 182,000 sq ft in Causeway Bay and Tsim Sha Tsui, two of Hong Kong’s prime office districts, according to agents familiar with the matter.

Two floors in Hysan Place in Causeway bay and six floors in Sun Life Tower in Harbour City in Tsim Sha Tsui have been put on the market for new tenants. According to Land Registry records, WeWork signed a 10-year lease for the Hysan Place floors in November 2018, with the contract starting in November 2019. The 10-year lease for the Sun Life Tower floors was signed in July 2019 and started in December 2019.

In October, the company said “in the fourth quarter, WeWork will add four new locations in Hong Kong, namely WeWork The Quayside in Kwun Tong, WeWork Sun Life Tower in Tsim Sha Tsui, WeWork Hysan Place in Causeway Bay and WeWork H Code in Central.”

Hysan Development and Wharf Reic, two of Hong Kong’s major retail property operators and WeWork’s landlords at Hysan Place and Harbour City, respectively, declined to comment on the early surrender and on whether they expected any compensation for breach of lease.



The withdrawal is its first in the four years since it entered the Hong Kong market. WeWork continues to operate a coworking space covering four floors in Hysan Development’s Lee Garden One development in Causeway Bay. It acquired 1 million sq ft of office space, or 1 per cent of the world’s most expensive property market, during a stunning acquisition spree. The coworking industry as a whole accounts for 3 per cent of office space in Hong Kong.

The South China Morning Post was able to access the WeWork space in Hysan Place and found that decoration work had been completed. The resting area as well as the smaller rooms had been readied in the format seen at other WeWork spaces. Long tables had been set up by a window overseeing Victoria Harbour, and a pantry had already been equipped with a microwave, a water dispenser and a refrigerator. The building security said the floors were currently unoccupied and that WeWork had never moved in.

WeWork did not respond to requests for comment.

Market observers said Hysan Development and Wharf had burned their fingers, as WeWork had signed the leases through special purpose vehicles, or subsidiaries with low registered capital created for the precise purpose of signing individual tenancy contracts.

“Hi-tech or new-economy companies sometimes adopt such structures during their expansion to separate the main entity’s cash lifeline and assets from other units,” said Kenneth Yeo, director and head of specialist advisory at accountancy firm BDO.

He said that if these specially formed units ceased operations when things got bad, creditors had no means of chasing the main entity. “As long as the main entities or directors do not play the role of guarantor, they are also off the hook,” Yeo said.

There is not much the landlords can do, other than collect the furniture and equipment left behind, said Vincent Cheung, managing director of Vincorn Consulting and Appraisal. “But that would be just a drop in the ocean,” he said.



Hong Kong’s once-robust office leasing market has taken a beating amid an economic decline that set in soon after the city’s anti-government protests kicked off in June last year. The situation has worsened since the coronavirus outbreak earlier this year, and the city’s economy has contracted for two consecutive quarters now. As a result, no offers have been received for both the locations, said the agents familiar with the matter.

They said WeWork paid HK$70 (US$9) per square foot a month for the floors at Hysan Place, and HK$63 per square foot a month for the Sun Life Tower floors.

“It’s impossible to get those rents now. What landlords with large vacant spaces should be worried about is finding a new taker,” Cheung said. Vacancy rates across Hong Kong have reached 7.3 per cent on average, a 10-year high, according to commercial property agency Colliers International.

Hong Kong’s economy shrank 8.9 per cent year on year in the first quarter of this year, its worst performance on record, the government said last week. Unemployment rose to 4.2 per cent in March, nearing a 10-year high, as companies either asked staff to take unpaid leave or laid them off to cut costs.

In this environment, WeWork is likely to cut more space in the coming months, with the pandemic and resulting social distancing measures proving to be a last straw for the company’s ambitions in Hong Kong, analysts said. It currently runs 12 coworking spaces in the city. Its spaces in Swire Properties’ Generali Tower in Wan Chai, in Henderson Land’s H Code office tower, as well as in Hopewell Centre are among those believed to be struggling to stay afloat.




AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×