Australian co-working firm Victory Offices exits Hong Kong after closing sole location at The Center

Melbourne-headquartered Victory closed its 25,000 sq ft space on the 76th floor of The Center last week
The year-long economic recession has seen the number of operators in the city drop to 13 from 15 during a market peak in mid-2018

Property investment

Cheryl Arcibal

Published: 1:05pm, 22 Dec, 2020

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Hong Kong’s Covid-19-hit economy has claimed another co-working office space operator.

Victory Offices, an Australian firm, has pulled down the shutters on its Hong Kong operations just over a year after its launch. The company has closed its 25,000 sq ft space on the 76th floor of the iconic The Center last week, the Post has confirmed.

“It’s a combination of high rentals and Covid-19, and that’s a recipe for disaster,” said Kenny Lam, the former regional manager for Southeast Asia at Victory, who left the company last week. “That’s my summary of the situation.”

He said that the company’s clients were mostly established companies, but some left because of cost-cutting.

02:02

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The flexible office space provider enjoyed between 65 and 70 per cent occupancy at one point, but since the middle of this year, it had plummeted to about 30 per cent. Victory’s space at The Center could accommodate up to 40 companies, CEO Dan Baxter said during an interview when the location was officially opened in September last year.

Despite the then escalating anti-government protests, Baxter said he was undeterred by the unrest and that the company was “actively looking” for other locations in Hong Kong.

Melbourne-headquartered Victory leased the space from landlord Hui Wing-mau, chairman of Hong Kong-listed Shimao Property, opening its first location outside Australia when the city’s civil unrest was in its fourth month and the economy was on the brink of a recession.

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“Our decision to close the 76th-floor operation was made when information came to light that has proved the landlord’s intent to take over Victory Serviced Offices’ beautifully designed space, whilst engaging with our employees to do so,” the company said in a written reply to the Post’s enquiries. “As such, we have chosen to cease operations in Hong Kong.”

Hui was unavailable for comment. But a source close to the landlord said Victory was unable to pay rent.

Victory Offices had leased space at The Centre from Shimao Property chairman Hui Wing-mau. Photo: K. Y. Cheng

Victory denied it, but said that there was an ongoing legal action. It did not elaborate.

While the terms of the agreement are generally confidential, higher floors at The Center that were leased in September last year ranged from HK$95 (US$12.30) to HK$118 per square foot, data from property agency Midland ICI shows.

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The year-long economic recession has triggered a few exits or surrenders of sites by co-working operators in Hong Kong. The number of operators in the city has fallen from 15 during a market peak in mid-2018 to 13 now, while the number of centres has dropped from 39 in 2018 to 34 currently, according to Knight Frank.

US operator WeWork surrendered office spaces at locations such as the Harbour City complex in Tsim Sha Tsui, Hysan Place in Causeway Bay and Hopewell Centre in Wan Chai, while Chinese operator KrSpace exited Hong Kong, surrendering its space in Times Square.