SINGAPORE: Co-working space provider WeWork is set to take over the lease of the 21-storey HSBC building in Collyer Quay, marking an expansion by the US firm in Asia.
WeWork, backed by Japan's SoftBank Group, will lease the building from CapitaLand Commercial Trust (CCT), the Singaporean office landlord said in a statement on Wednesday (Jul 17).
The tower, 21 Collyer Quay, will be WeWork's biggest property in the Southeast Asian nation and has a net lettable area of about 200,000 sq ft. It is currently valued at S$462.2 million.
CCT said its lease deal with Hongkong and Shanghai Banking Corp, a unit of HSBC Holdings, will end in April 2020. WeWork's lease will start in the second quarter of 2021 for seven years.
HSBC said last year that it would relocate its Singapore headquarters to Marina Bay Financial Centre (MBFC) Tower 2 by April 2020 to accommodate the company’s rapid growth plans.
Co-working spaces have become popular among startups because these give them the flexibility of short-term leases in well-decorated spaces and keep overheads low. Increasingly, larger companies are also using co-working firms to manage their offices.
In Singapore, the flexible workspace footprint has more than tripled since 2015 and now accounts for some 4 per cent of the office space in the central business district, according to real estate consultancy Colliers.
WeWork may get signage rights for the building, which would boost its branding and visibility in the central business district, said Ms Christine Li, head of Singapore and Southeast Asia research at property services firm Cushman and Wakefield.
"It's a very good catch for WeWork," said Ms Li, because typically only a few floors are available in the business district due to low vacancy.
WeWork will occupy 20 floors of the building, the US firm said in a separate statement, but did not provide details about the one other floor.
Rents for grade A buildings in Singapore's central business district surged 12.7 per cent last year, Cushman and Wakefield's Li said.
She expects rents to stay mostly flat this year at the current level of about S$10.61 per square foot per month, due to a slowing economy and uncertainties from trade tensions between the United States and China.
Founded less than a decade ago, WeWork has locations in more than 28 countries, including in Singapore, China, India.
The money-losing firm, which has filed paperwork for an IPO, has faced questions about the sustainability of its business model that is based on short-term revenue agreements and long-term loan liabilities.