Unlike its global parent, WeWork India is seeing robust growth and expects to end the current fiscal year with 93,000 seats and 8 million square feet of operational space from 90,000 seats and 7 msf space at the end of September. It is also hopeful that its growth will be a support to the parent company.
“The year has been great since the start of 2023,” WeWork India CEO, Karan Virwani told businessline. “And also from the start of the financial year we have been very focused on growing the business,” he added.
For the half year to September the co-working office operator had around Rs 831 crore revenue and EBITDA of Rs 532 crore, a 90 per cent rise from year ago. Next year it plans to add Chennai to its network, having added Delhi this year. It added the 53rd building to its portfolio on Friday, in an Embassy-owned building ‘Manyata’ in Bengaluru.
Virwani made it clear that there was no spillover of the troubles plaguing WeWork Inc which has recently filed for bankruptcy, having expanded at an unsustainable rate. He said that WeWork Inc had provided monetary support to the Indian company when it was “not at its healthiest.”
“So if they’re going through some pain right now, we will do whatever we can to support them and we see no risk from them holding a stake or impacting our business at this point,” Virwani said.
WeWork India operates on a franchise model with Bengaluru-based Embassy group holding over 71 per cent stake and the remaining stake being held by the subsidiaries of WeWork Inc.
The flex segment is seeing good demand, especially from global corporations who are delaying decisions on taking up permanent office space in India.
The company has been growing steadily, selling close to 40,000 desks a year, and adding 20,000-25,000 members a year. Virwani said that since COVID they had grown in a “calculated” way.
“We are tailoring our growth to just make sure that it keeps up with the demand and we keep our occupancies healthy.” The co-working operator has consistently kept its occupancy at 80-82 per cent across its portfolio throughout the year.
The aim is to be in the top 7-8 metro cities where it will concentrate on growing. The strategy is to pick the best micro markets in the cities and take up space in multiple locations within those markets, “rather than spreading out into places where there’s not much demand.” Bulk of its tenants are large corporates and enterprises while small and medium enterprises make up the remaining.
Virwani said that they had already identified locations where they plan to be in the next few years and started signing leases.
Embassy properties account for 15-20 per cent of its total space, but there is no particular preference given to that and Virwani said that they did lease space with all other developers as well. The Embassy group has over 70 msf of operational area.
Despite the travails of WeWork Inc, the brand has not suffered in India. Virwani said that the brand recall was strong and “it is still a category-defining brand” globally.
He pointed out that many of its customers were global and they were satisfied with the products and the experience that the Indian franchise was offering. Virwani said that many other global companies had gone through bankruptcy and emerged stronger.
India was the first country where WeWork initiated the licensed franchise model and the success of it has encouraged it to follow it in other places as well such as Israel.
In response to a question as whether Embassy would buy out WeWork’s stake in the Indian unit, Virwani said “I am always ready to be a buyer of equity in this company.” He said that a stake buy was not “off the table”, but there were no discussions now.
He also said that the Embassy group was open to bringing in a strategic investor on board, if they could add more value to the business.