U.S. shared workspace group WeWork has pulled out of at least five negotiations to take on new space in Hong Kong this year, sources said, highlighting a cooling down of the co-working industry because of financing constraints.
Two sources with direct knowledge of the matter said WeWork in Hong Kong pulled out of talks on most of the space it had planned to secure after failing to get budget approval.
WeWork was not immediately available to comment.
Separately, real estate group Savills said in a release on Wednesday a major Chinese co-working space group, KR Space, had pulled out of three leasing deals in Hong Kong with a total floor area of 160,000 square feet, all in prime business locations.
The two sources said KR Space kept a fourth deal in a mall-office complex in Causeway Bay on Hong Kong island, but had dropped one of the three floors it had planned to lease.
KR Space was not immediately available for comment.
Commenting on the general co-working space market, Savills head of office leasing Ricky Lau said too many were entering the market too quickly.
“The demand for co-working space is not catching up with the investment,” Lau said.
In January, Japan’s SoftBank boosted its stake in WeWork by $2 billion but this was billions of dollars below what the co-working space provider had hoped to raise to fund growth.
WeWork is currently in seven locations in Hong Kong, and it is planning to open two more this year.
Co-working space operators in mainland China are shifting their focus from expansion plans to services such as customising offices for clients, as rising vacancy rates and tighter financing slow their exponential growth of the past two years.