WeWork Cos, the coworking space company that is among the world’s most valuable start-ups, is in advanced talks to rent a building in Hong Kong’s popular nightlife district near the territory’s business center, according to people familiar with the matter.
The New York-based firm is seeking to rent Hotel LKF by Rhombus on Wyndham Street, said the people, who asked not to be identified because the information has not been publicly disclosed.
The boutique hotel, located in the Lan Kwai Fong district that is known for its bars and nightclubs, closed down on July 1 and is to be converted into an office building by the middle of next year, the owner, Peterson Group, said last month.
WeWork’s expansion in the world’s priciest property market comes as soaring office rents have pushed some financial firms and hedge funds out of the financial district.
Demand for flexible and shared offices is surging in Asia, with the area taken up by such work spaces in Hong Kong’s central business district expected to double this year to 23,225.76m2, according to property broker Colliers International.
Flexible work spaces accounted for about 9 percent of the office space in the territory’s financial district as of last year, Colliers said.
Spokeswomen at Peterson Group and WeWork declined to comment.
The agreement is not final and negotiations might still fall through, one of the people said.
WeWork rents out flexible office space to start-ups, freelancers and businesses, and runs more than 20 office projects across Asia.
As part of its expansion across Asia, WeWork announced a joint venture with Softbank Group last week in Japan and plans to open its first office in Tokyo next year.
WeWork earlier this month raised US$760 million in a funding round that values it at about US$20 billion after the investment, said a person familiar with the matter, ranking it among the world’s five most valuable start-ups.
The company last year rented more than 9,290.304m2 in Hong Kong’s Wan Chai and Causeway Bay areas, according to data from Jones Lang LaSalle Ltd.
Hotel LKF, which includes 14 floors of rooms and nine floors of retail space, is housed above Gordon Ramsay’s Bread Street Kitchen & Bar restaurant, which is expected to stay.
The average annual prime office rent in Hong Kong is US$112 per square foot (0.093m2), higher than the US$86 per square foot in London’s city center and US$82 per square foot in midtown New York, according to data from Colliers.
Coworking spaces let people stay in traditional office areas while reducing rental costs, Hong Kong-based Jones Lang Lasalle research head Denis Ma (馬安平) said in a telephone interview.
“Twelve months ago, when we talked to developers and asked them what kind of tenants they were targeting to fill up their new buildings, most would’ve mentioned large international banks. Fast forward to today, most will say they’re talking with coworking operators,” Ma said.
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