WeWork Readies Expansion to South America
WeWork Cos., the world’s largest co-working startup, is preparing to enter Argentina and Brazil while scouting potential sites in nearby countries as part of an expansion in Latin America.
The New York-based shared-office startup, which was most recently valued at $16 billion, plans to open two locations in Sao Paulo in June, as well as at least one in Rio de Janeiro by the end of the year, according to Pato Fuks, the company’s regional general manager for Latin America.
WeWork was founded in 2010 and now has 143 locations in 35 cities across the world. The company typically rents office buildings, refurbishes them and then rents out desks or small offices to startups and other customers looking for a place to work with free coffee and beer kegs. It has pushed aggressively for international expansion in the past several years. The company raised $690 million last year for a drive into Asia.
But Latin America remains a mostly untapped market for WeWork. The company opened two buildings in Mexico City last year and has a third slated for April, Fuks said. The company said it plans to open its first South American location in Buenos Aires on May 1. WeWork is also looking at buildings in Lima and Bogota, Fuks said. "There's a lot of business being done throughout Latin America," he said. "If you're from Colombia, you want to grow in Brazil and Peru."
WeWork is coming late to Brazil, where shared workspaces have already spread. The country’s co-working market, which includes many local players, grew 50 percent in 2016 to 400 spaces, according to real estate consultant Engebanc. The region’s weak economy is lowering demand for commercial real estate leases.
About 23 percent of Sao Paulo’s 5 million square meters (16 million square miles) of office space is empty, according to the most recent Engebanc study. In Rio de Janeiro, which faces an oil and gas crisis, about 27 percent of the 2.7 million square meters of available office space is vacant.
In Mexico City, WeWork's business performed better than expected, Fuks said, which inspired it to look for a third building in the city. Even larger companies are interested: Bacardi rents about 100 desks in one of the Mexico City offices and has plans to build a Bacardi-sponsored bar on the building's rooftop, WeWork said.
Brazilian landlords are interested in bringing on co-working spaces as tenants for their so-called Class B properties, which are often family owned and conveniently located but lack the amenities that high-end tenants demand. “This is happening quite often, especially close to subway stations,” said Daniel Iannicelli, a director at Engebanc.
Fuks said economic downturns provide an opportunity for WeWork to get leases for buildings at a lower price and give entrepreneurs access to them. "We give these guys a chance to get into these big buildings," he said. "They don't have to spend money on decorating or take up a whole floor."