The dramatic fall of WeWork, the worlds largest coworking firm, has put the spotlight on the future of managed workspaces globally and in India.
Once valued at a staggering $47 billion, the unicorn is now cash-strapped thanks to its reckless expansion and diversification. In the July-September quarter of 2019, WeWork posted losses of $1.3 billion, up from $497 million a year ago. Further, the US-based companys move to drop plans to launch an initial public offering in September saw its valuation fall to $7.8 billion. Now, the Softbank-backed company is scaling back operations and cutting jobs.
While WeWorks India operations, which are run by the Bengaluru-based real estate company Embassy Group, have so far remained unaffected, the fall of the giant is likely to have an impact on the overall sentiment of the sector. After all, WeWorks early success had inspired entrepreneurs in India to experiment with flexible workspaces.
Today, India is the second-largest market for flexible workspace in the Asia-Pacific region after China with over 1,000 co-working spaces. The cumulative area under coworking spaces in India currently stands at 6.9 million square feet, according to the real-estate consultancy JLL.
Given that coworking spaces in India are in a nascent phase of growth, the failure of a pioneer will weigh on investor sentiment in the short-term, say industry experts. WeWork has 26 coworking spaces operating...