WeWork, an American company that provides shared workspaces for technology startups, plans to launch in South Africa later this year. A development that would mark the first African expansion for the $47 billion New York-based company.
The company will open its first location in the upmarket Johannesburg suburb of Rosebank in the third quarter of the year. The U.S. shared workspace provider, which is backed by Japan’s SoftBank Group Corp, will team up with Redefine Properties, one of South Africa’s biggest real estate companies.
Managing Director of WeWork, Eugen Miropolski said “expanding here is an obvious choice for us: it’s our first location in Africa and, with its global outlook, South Africa is the gateway to the rest of the continent, so we’re excited to welcome new members and grow our community here”.
WeWork leases office spaces and sublets them out to individuals and start-ups – a model that creates a mismatch between its erratic income stream from clients who can rent for as little as month and the fixed rent it has promised to landlords.
Sources told Reuters that in South Africa, WeWork will sign a revenue-sharing lease with Redefine, which broadly means the rent would depend on the revenue it generates from subletting the space. The source added that the model is being rolled out to landlords, and is expected to become increasingly common for the company.
Miropolski revealed WeWork had no immediate plans to expand elsewhere on the continent. He said “we’re looking to expand our footprint across Africa, and we’re very excited about the potential here, but right now, we’re fully focused on launching in Johannesburg and building our local community”.