WeWork looks to exit sites in Sydney, Melbourne and Perth

US co-working giant WeWork is planning a $US9bn global listing this month but its Australian footprint is shrinking.

WeWork is headed for a $US9bn float globally but its local operation is under pressure.​

The Australian arm of co-working company WeWork is under rising pressure as it seeks to exit three key buildings and looks to emerge from the coronavirus crisis as a leaner operation.

Leasing experts have said WeWork is looking to exit three sites – in Sydney, Melbourne and Perth – although behind the scenes talks are underway.

The group is believed to be considering its space at the EG Funds’ 50 Carrington Street, Sydney, and is in talks with landlord Impact Investment Group about its presence at 401 Collins Street in Melbourne. It departed a Centuria Capital building in Perth last year.

The moves in Sydney and Melbourne come after the co-working giant asked landlords for rent relief and it looks to shed unprofitable locations, ahead of a global move that will see it merge with a special purpose acquisition company, BowX Acquisition Corp, and list at a valuation of $US9bn.

The company’s tactics as it seeks to cut costs at its local operation have left local landlords nonplussed, as many hold long leases with the company.

WeWork did not address its plans for the properties concerned when contacted last week, saying it was reorganising its operations.

“This isn’t about Covid – as part of our portfolio optimisation efforts, we will continue, like any responsible business, to proactively manage our real estate portfolio to ensure it both aligns with this commitment and our profitability goals,” the company said.

The company still has ambitions of maintaining other locations in the heart of Sydney and Melbourne, in the hope that workers will return to the cities.

“WeWork’s goal is to enhance our members’ work experiences with class-A spaces in the best locations,” the company said. “This will include working with our landlord partners as we invest in maximising the potential of high performing locations, opening new locations in markets where we see opportunities for growth and improving older locations.”

The Australian revealed last month that WeWork had stopped paying rent at some fringe sites and was asking landlords for rent reductions, as elongated lockdowns in Sydney and Melbourne bite.

The company sought relief from its landlords in a sign that co-working is coming under pressure both from the length of the lockdowns and falling cash flows as customers turn away from their model.

WeWork was also forced to offer discounts to retain members as stay-at-home orders were imposed in Sydney and Melbourne, prompting member cancellations.