Soho China takes a page out of the WeWork playbook

Developer has leased 16K desks in Beijing and Shanghai

Aug.August 17, 2016 01:00 PM

From the New York website: Call it the WeWork effect.

China’s largest office developer, Soho China, is branching out into the shared office market in an attempt to wring more profits out of China’s overbuilt office market.

The Beijing-based developer — which owns a sizable stake in New York City’s GM building — has made the shift over the past 18 months, according to the Wall Street Journal. Long-term leases drive the majority of the company’s revenue, and the shift for the Chinese developer comes at a time when the company’s profits are shrinking and and China’s economy has slowed.

“We’ve been searching for the next growth area,” CEO Zhang Xin told the Journal, referring to a period of rapid building that has slowed. “Cities are built, buildings are done.”

Soho China currently has 16,000 desks it is leasing in Beijing and Shanghai through its coworking brand, known as 3Q. While there are no immediate plans to bring the concept stateside, Zhang outlined a plan to ramp up the coworking strategy in several new markets, and said the company’s existing office space gives it a leg up, which will allow it to scale quickly.

In China, WeWork recently opened its first location last month with 500 desks and quickly leased all of them.  There are about 100 other competitors in the market.

But not everyone thinks coworking is sustainable. “The entrepreneurial drive is strong in Beijing, but it remains to be seen if it could be just as strong in other cities,” cautioned Stephanie Lau, an analyst at Moody’s Investors Services.

Zhang disagreed. Five years from now, this kind of young, high-growth—hypergrowth—company, there will only be more of them, not less of them,” she said, referring to internet and tech startups that often lease co-working space.

“This is a business you have to go for scale,” she said. “We know who the users are, we need to go where they are going.” [WSJ] — E.B. Solomont

Related Articles

Los Angeles skyline (Credit: iStock)

LA office leasing drops in Q4 amid WeWork, tech sector pullback

CBRE CEO Robert E. Sulentic, and Keller Williams Founder Gary Williams with the Lantana property

Keller cries foul: Brokerage sues CBRE over WeWork lease deal

1200 W. 7th Street and 5750 Wilshire Boulevard (Credit: Google Maps)

Here are LA’s biggest office leases of 2019

From left: Hiten Samtani, Bridgid Coulter of Blackbird, Kat Lau from Industrious and Jim Doorne of IWG

What’s next for the co-working business?

Hudson Pacific Properties CEO Victor Coleman and the Westside Pavilion (Credit: Google Maps)

Hudson Pacific wants full control of Google-leased One Westside; not sweating WeWork

WeWork’s Adam Neumann and Onni Group President Rossano de Cotiis with a rendering of Wilshire Courtyard (Credit: Getty Images and Michael Maltzan Architecture)

Onni inks lease with WeWork after closing on massive Wilshire Courtyard purchase

Adam Neumann, Arash Gohari, and one of their new offices in Santa Monica

Headquarters by WeWork expands into LA; adds to NY locations

David Ellison’s Skydance buying Santa Monica office campus for $350M: sources

David Ellison’s Skydance buying Santa Monica office campus for $350M: sources