WeWork is undeniably a premium coworking space provider, how does it excel and ensure its survival in a saturated property market?

Turochas Fuad, the managing director of WeWork Southeast Asia – describes how the New York City-based coworking space provider operates on a global scale.

During the official launch of WeWork’s debut space in Malaysia (at Equatorial Plaza), StarProperty.my caught up with Turochas Fuad, the managing director of WeWork Southeast Asia (he sometimes goes by “T”) – and we were treated to an inside look into how the coworking space provider headquartered in New York City expanded its footprint in Southeast Asia amidst a coworking boom.

The standard formula for coworking spaces entails providing affordable arrangements ranging from small office suites to single-seat desks – “hot desks” in the vernacular of the industry – coupled with convenient access to public transport, and for discerning urban nomads, highly sought-after addresses.

#1: Location

Equatorial Plaza from SPACESCAN on Vimeo.

Dozens of coworking space providers are already operating within the central Klang Valley area, but WeWork sets itself apart from others by seeking out properties situated at the heart of commercial business districts (CBD) around the world.

As Turochas “T” Fuad puts it, “When we do expand to new markets, new cities, we look for what we call ‘Main and Main’ – that’s where the centre of life is happening.”

In most cities around the world, these intersections of main streets are highly valued, and as a consequence, properties in these areas tend to be prohibitively expensive to all but the most well-funded entities.

WeWork leverages the prestige of a global brand with a 100-year trajectory and the prospect of long-term collaborative relationships with property owners to secure valuable addresses and provide premium coworking spaces at competitive rates.

“We take reference from the fact that we see ourselves as a 100-plus-year-old company, and we when we do enter the market we see it as a long term arrangement and we do take a longer lease.”

#2: Lease

While Turochas Fuad remained tight-lipped on the particulars of WeWork’s lease at Equatorial Plaza, he was willing to admit that the “double-digit lease” was “longer than a usual occupier”.

On how WeWork’s relationships with property owners differ from most other coworking space providers, Turochas Fuad says, “In Malaysia, we have quite an interesting structure. We call it a participatory lease. We have a partnership with a local investor – Datuk Douglas Cheng.”

“We actually come together, and he funds our operations in Malaysia. In return, there is a form of a management agreement, a revenue share, that we have between us.”

WeWork’s participatory lease partnerships entitle property owners to a share of the profits that the coworking space provider generates – an additional incentive for landlords to recognise the value that WeWork brings to the developments it occupies.

“We want to make sure that we work with a developer who understands what WeWork can bring to the property.”

Beyond the possibility of a longer-than-average tenure and revenue sharing agreements, WeWork’s presence in a development apparently increases the property’s valuation.

“Whenever WeWork ends up in a building, the valuation of that property goes up – typically between 40% to 150%.”

“We have seen property owners across the globe, one recently in Singapore. As soon as WeWork signed the lease, not even moved in, the property owner tried to sell the building because the valuation increased.”

“I think we found a very win-win situation with Great Eastern, they know it’s a brand new building, and I think we can also look at the macro situation in Malaysia, and in Kuala Lumpur particularly.”

#3: Pricing

Given the current property climate and the likelihood of increased property valuations with WeWork’s presence – in addition to the coworking space provider’s propensity for longer leases and revenue sharing arrangements – WeWork is able to secure exclusive addresses around the world while providing its premium spaces at competitive rates.

“I think we’re very competitive. When we talk about price, it’s not comparing apples with apples. Because what you get from WeWork is very different. We would never claim to be the least expensive, but we are very competitive in terms of pricing and the value we provide.”

#4: Decor

In addition to the way WeWork interacts with property owners, the coworking space provider has some innovative means of maximising its resources to maintain profits and craft a consistent brand image in cities around the world.

“What we want to achieve is, when our members travel, we want them to feel like there’s always a duty floor, a front desk, there’s someone to greet you, there are consistently sized rooms I can book. All the way to that level to make people safe.”

Across all of WeWork’s spaces, there is a “similar brand image, similar look and feel,” as Turochas Fuad says it, “they may slightly differ in terms of manufacture and brand but we do strive for consistency.”

“60% to 70% [of WeWork’s spaces] are similar, 30% to 40% are unique because we want to localise as much as possible. Accents like the ratan lampshades are symbolic to the country we are operating in.”

“We also localise the product in a very significant way, we understand that we can’t sell a New York product in KL. We have to sell a KL product in KL.”

#5: Cost-Savings

Having been in operation for nearly a decade, WeWork relies on a wealth of data regarding everything from the optimal size of office suites to the most efficient distribution of FF&E (Furniture, Fixtures, and Equipment) in their spaces.

“For example, how we purchase our flooring, we’ve got so much flooring for our 400 plus locations around the world, we have a few dedicated factories that provide us with those materials.”

“From fridges to the sofas and chairs, we work with suppliers to buy in bulk – not just for one or two upcoming buildings but for a few years of buildings in advance.”

“Typically when you source deals, you want to be months to years ahead in terms of where we want to go, locations, so that the entire team can plan the product side, the delivery, all the way to building the demand.”

“We can buy in bulk and we have plans for a few more spaces like this in the next few years, so we engage the right construction companies – all of this can be done quite quickly, efficiently and very cost-effectively.”

“There are different limitations and challenges for each country, so we actually are looking at sourcing locally because it also saves us costs in logistics, import taxes, and we pass those savings to our members.”

#6: Culture

As with most other coworking space providers, WeWork's most obvious factor of differentiation would be its culture. As Turochas Fuad puts it, "I think it’s our authenticity and the genuine approach that we take."

"Yes, [other coworking spaces] may provide a similar product or solution, but we differentiate ourselves with our global platform, network, and our culture is very different."

"I think it’s very difficult to explain, but when Datuk Zainal Amanshah [of InvestKL] was talking about it, he said he read about it a lot, but when he stepped in he used the words we use, 'vibe' and 'energy' – that really explains what our main difference is compared to the local competitors."

"It is about building a solution and product around humans, around our members. We are not about selling desks or tables – it is not just about a real estate solution. But it is about bringing a community together and really helping our members grow and get them where they want to get to in a faster and more efficient manner. And to really build a much bigger thing than what they would have otherwise within their own means."

Read about the launch of WeWork's debut space in Malaysia at Equatorial Plaza here.