Dan Baxter, CEO of Victory Offices, believes that only coworking providers that have maintained cashflow over the past few months will survive, leaving Australia with just about four operators.
These comments come just after the company secured $15.3 million in capital raising to go towards keeping operations continuing over the next year.
“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,” said Baxter.
A report from CBRE has indicated that while several operators will likely have to close their doors, the industry as a whole will stay strong. The struggles of the sector will likely be in the short-term, but large corporations seeking alternative work solutions will prop the industry up.
In the meantime, most coworking and serviced office providers have hit the brakes on expansion plans as they work to weather this storm, and some experts predict operators teaming up to continue scaling in the future.
“The operators that get through this period, they will have stress-tested the business and there will be a good market for them on the other side of it,” said Brad Krauskopf, CEO of Hub Australia. “I think you’ll certainly get a lot of consolidation where parties join together.”