Co-working operators in Australia resort to closures due to the pandemic
While those that did remain open struggle to make ends meet
According to Dan Baxter of Victory Office, the COVID-19 outbreak has forced businesses to close because of limited cash flow needed to survive. To date, Commercial Real Estate revealed that only three to four large co-working offices remain open.
Just a week ago, Victory Office was able to obtain AUD15.3 million (USD10.6 million) through capital raising to reinforce their balance sheet, which will help them effectively control the ongoing impact of the pandemic, as well as finance their operating expenses in the next 12 months after filing for a seven-week voluntary suspension from trading on Australian Securities Exchange (ASX).
More: Commercial property investment deals in Australia tapered off amid pandemic
Dan shared that most of the smaller operators, especially those who only focused on providing co-working spaces and not serviced office suites, were having difficulty surviving the current climate.
“If things continue as they are and slowly improve, we will see about three to four players – the stronger and bigger ones – operating in this space,” said Dan.
“The smaller ones will fall down because it is a capital-intense industry and if the occupancy rate goes down to a very low number, they won’t be able to survive. The resilience is not there, which is why you will see the big players, like Regus (now IWG), Victory and Servcorp there for the long term.”
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