WeWork to vacate two prime Singapore locations amidst challenges

WeWork is set to vacate two prime locations in Singapore, Bloomberg reported on Tuesday, underscoring the co-working giant’s struggles in one of its most promising markets. The affected spaces include a facility spanning the 17th to 20th floors of Manulife Tower, which has ceased operations, and a three-floor office at UE Square, scheduled to close by 2025. In a statement to Bloomberg, WeWork acknowledged that while Singapore remains a "priority market," it had “made the difficult decision” not to renew leases at these locations. The company reaffirmed its commitment to operating in 12 other buildings across the city-state "well into the future." The properties being vacated are significant fixtures in Singapore’s commercial real estate landscape. Manulife Tower, a 28-story building in the Central Business District (CBD), is owned by Canadian insurer Manulife Financial Corp. Representatives of Manulife Financial did not respond to Bloomberg’s requests for comment. Similarly, representatives of UE Square, an 18-story property owned by United Engineers, a subsidiary of Yanlord Land Group, declined to comment on the impending closure. According to Bloomberg, WeWork’s decision comes amid mounting challenges in Singapore’s office market.

WeWork’s presence in Singapore

Since entering Singapore in 2017, WeWork rapidly expanded its footprint in the city-state, aiming to capitalise on its role as a regional business hub. By 2019, the company operated in 14 locations, providing over 800,000 square feet of space to clients ranging from start-ups to multinational corporations. This growth was seen as evidence of strong demand for flexible office solutions, especially during a boom in Singapore’s co-working market leading up to the Covid-19 pandemic. However, the city-state’s office market has faced headwinds. Prime office vacancies reached their highest level in more than two years during the third quarter of 2024, according to property consultancy Jones Lang LaSalle. Businesses seeking to reduce costs have increasingly consolidated office spaces, impacting demand for co-working facilities. This trend has directly affected WeWork’s client base in Singapore. Earlier this year, Chinese technology giant Tencent Holdings vacated a WeWork space at 30 Raffles Place, consolidating its employees in another prime office tower.

Broader challenges for WeWork

WeWork has faced global struggles, including its much-publicised failed IPO in 2019 and subsequent financial instability. The company filed for bankruptcy in late 2023, further highlighting its challenges. Since then, WeWork has been undergoing restructuring, including lease renegotiations and property rationalisations, which have led to reduced operations in several markets, including Singapore. The company exited bankruptcy in May 2024 and has since been focused on rationalising its real estate portfolio globally. In April, WeWork announced that it had completed lease negotiations and rationalisation in Singapore, expressing plans to maintain operations in its existing buildings. Singapore, once a bright spot for the company, remains a key market. A mass return to office work following the Covid-19 pandemic had briefly boosted demand for flexible office spaces in the region. However, WeWork’s recent closures signal the challenges it faces in sustaining growth and profitability amid evolving corporate strategies and rising costs.

Future outlook

Despite these closures, WeWork continues to highlight its commitment to the Singapore market. In its statement to Bloomberg, the company emphasised that its 12 remaining locations in Singapore are integral to its long-term strategy. However, the co-working sector in Singapore faces stiff competition. Established operators like The Great Room and JustCo, alongside new entrants, are vying for a share of the market. Combined with economic pressures and shifting tenant preferences, the industry faces significant challenges. WeWork’s recent moves in Singapore reflect both its global struggles and the broader trends reshaping the flexible office sector. While flexible workspaces remain relevant, their success depends on adapting to the shifting demands of the corporate landscape.