Brisbane small business nervous wait as global shared office group WeWork faces collapse

Brisbane small businesses could find themselves homeless with global office-sharing group, WeWork, revealing it is on the brink of collapse and may not survive the year.

WeWork says its ability to continue operating relies upon a major turnaround.

Brisbane’s business ecosystem faces a major blow with millennial-focused shared office group WeWork revealing it is on the brink of collapse and will struggle to survive the year.

The New York company leases buildings and then sublets office space, which often features games rooms, bean bag chairs and free beer on tap, to freelancers, small and start-up businesses.

Its explosive popularity before and during the Covid-19 pandemic saw it hit a valuation peak of $US47 billion in 2019.

WeWork’s 777 global sites including four across Brisbane on King, Eagle, Queen and Edward streets now face an uncertain future.

Brisbane technology entrepreneur Nathan Schokker, who used WeWork and other shared office spaces for nine years, said tenants face a “nervous” future

“A lot of them, if they haven’t already, I’m sure would be looking at different spaces because they could show up tomorrow and the doors would be locked and they’d be scrambling to get their stuff out,” he said.

“It wouldn’t be a good thing for the Brisbane business environment for it to close.”

WeWork’s costs start at $354 per month in Brisbane with prospective tenants able to choose from a private office for up to 100 people, a single desk in a shared area or a hot desk and lounge in a co-working space.

WeWork has faced an uncertain future since questions of its financial viability were first raised.

At June 30 WeWork had $US680 million of liquidity including $205 million cash.

“As a result of the company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the company’s ability to continue as a going concern,” it revealed.

WeWork noted its ability to continue operating was dependent on management’s successful plan to improve profitability over the next 12 months.

It said rent reduction and tenancy costs, increasing revenue, reducing member churn and controlling costs would be key.

Mr Schokker, a previous president of the Brisbane Junior Chamber of Commerce, said scandal surrounding WeWork co-founder Adam Neumann coupled with growing financial concerns delivered persistent questions about its viability.

“Start ups and businesses on the ground using those spaces were wondering whether they were going to close and we’d be locked out,” he said.

“It felt like they were on this cliff edge of going bankrupt.”

Mr Schokker said if WeWork did close its start-up businesses would likely move back to working from home or at cafes.

“It isn’t a good thing because it dampens their collaboration … and isn’t cost effective,” he said.