25th November, 2019
Global co-working startup WeWork has scrapped two major Australian expansion deals across Sydney and Melbourne as the company’s luck continues to run dry.
Last week, the Australian Financial Review (AFR) reported that two of WeWork’s major expansion deals were ‘on ice’ as the co-working unicorn continued its attempts to cut back costs amid a catastrophic few months.
According to the AFR, WeWork has been in discussions since July of this year to ramp up its Australian presence by taking on a massive 20,000 square meters across a large tower on Sydney’s Market Street, as well as 15,000 square meters in ANZ’s former headquarters on Queen Street in Melbourne’s CBD.
WeWork has also failed to get its negotiations for acquiring its first piece of real estate in Melbourne over the line, with the AFR’s sources saying that the deal had “scuttled completely”.
The failed expansion plans are the Australian branch of the multi-billion dollar startup’s first taste of the ongoing drama that WeWork has been experiencing over the last few months.
Earlier this year the company filed for an IPO and finalised a very large capital raise, which led to its subsequent $47 billion valuation.
But after releasing its IPO prospectus, the company received significant backlash from key stakeholders, causing it to delay its highly anticipated IPO.
Eventually, the company scrapped its plans to go public entirely, ultimately leading to the resignation of WeWork’s co-founder and CEO, Adam Neumann.
Neumann, one of WeWork’s original founders from back in 2010, had been showing signs of questionable behaviour in the leadup to the IPO announcement, with reports of the 40 year old leaving a cereal box filled with marijuana on a private jet, throwing lavish work parties and helicoptering employees to and from his residence in the Hamptons.
As the debacle unravelled, WeWork’s highly inflated valuation plummeted by more than 80 percent, with a huge amount of redundancies and layoffs taking place around the world.