Demand for flexible offices has been growing faster in Asia Pacifie than anywhere else in the world, according to Jones Lang LaSalle (JLL). The global real estate services firm reports that the region’s stock of flexible floor space is growing at 35.7 percent per year compared to 25.7 percent in the US and 21.6 percent in Europe. ln Hong Kong, for example, the flexible work space offering has grown by 50 percent in just three years.
Entrepreneurs and start-ups are now flocking to co-working spaces for individuals or companies to use as they would any other office. ln exchange for a membership tee, the worker gets access to an infrastructure, workspace, colleagues … and a coffee maker. Versatile workspaces offer communal areas where workers can congregate and hold meetings, plus also quiet, more isolated areas for individual work.
Co-working – a growing trend
Co-working is a growing trend among The Wall Street Journal and Dow Jones clients. “Many companies – small and large – have found that leasing temporary co working space allows them to eut their rent dramatically, while at the same time having the flexibility to expand as they need,” says Mae Cheng, Publisher & Editor in Chief, Mansion Global/Dow Jones Media Group.
The industry’s impressive growth has brought with it a sharp learning curve for many co-working operators.
Sorne of the key takeaways include the need to localize their offering. A cookie-cutter style has not always met success – what works in New York City or London may not translate well to Hong Kong or Shenzhen.
Flexibility and creative factors are attracting tenants
Stephanie Kelly is Hong Kong Fair Director of the Affordable Art Fair, one of the world’s largest art fair organizers. She and her team operate out of The Hive in Wanchai, part of a network of co-working spaces across Asia, which focuses on the creative industries.
“I am privileged to be one of the first Hive tenants, joining in 2012, when we were setting up the Affordable Art Fair in Hong Kong,” says Kelly. “At the time there were only two of us and we chose a co-working space for the proximity to our venue at the Convention Center, flexibility of hotdesking, with the ability to upsize to an office for two months as well as the reduced financial risk of only one month notice period. Six years on we now have a permanent office at The Hive with four full-time staff and a small troop of interns who squeeze in during the lead up to the fair.”
Operators are offering a service, not just a space
lndeed, savvy co-working space operators are looking far beyond offering a simple desk and printer. Paul Salnikow, Founder and CEO of The Executive Centre (TEC), a premium serviced office provider with more than 125 centers in 30 cities in Asia Pacifie and the Middle East, says: “Over the past three years, TEC has generated over US$200 million exclusively from service revenue, derived from tens of thousands of individual transactions focused on supporting our members.”
“For example, IT services are important for our clients and we offer full lT continuity, as well as complex, customizable infrastructure solutions. TEC also offers corporate secretarial, human resources administration, bookkeeping services, as well as marketing, event management and even travel logistics.”
A sense of community is equally important for co working and flexible space providers.
“We create a globally accessible community of professionals throughout ail our centers through technology and hosting regular professional events to help our members grow bath professionally and personally,” says Salnikow.
Corporations moving in on co-working
The plug-and-play factor of co-working spaces is key to the growth of corporate demand, particularly for larger companies. The ability to move in and out of an office at short notice and avoid complicated contract negotiations and fit-out work is a convenient option for many occupiers. At the same time, businesses are looking to encourage collaboration among employees and are using shared workspaces to foster innovation through exposure to new ideas and ways of working.
HSBC made headlines last year when it moved its 300- plus Design Thinking team into WeWork’s Causeway Bay operation. “Today’s smart developer is looking at how they can create office buildings with more flexible space. “
Flexible space couId account for 30 percent of corporate portfolios within 12 years
Although the flexible space market still accounts for less than 4 percent of Grade A office space across key Asia Pacifie markets, further growth is on the cards for 2018, according to JLL. lndeed, flexible space couId account for as muchas 30 percent of corporate portfolios by 2030.
“I foresee that more landlords will form ventures with co-working operators or maybe they will develop their own flexible working spaces to meet the needs of new tenants,” concludes Cheng. “Today’s smart developer is looking at how they can create office buildings with more flexible space to suit the needs for the current and next generation.”
According to JLL, flexible work spaces will be an amenity as essential in a commercial building as, for example, food and beverage outlets or a gym. Looking ahead, we can expect convergence to grow, with serviced office operators developing co-working brands and co-working brands targeting the clients of serviced operators in the market.