Co-Working Spaces are Taking Over the Office Market
Rapid growth has pushed flexible workspace well and truly into the mainstream in Asia Pacific. Operators are expanding aggressively in virtually every major city, landlords are building flexible workspaces into their portfolios, and multinationals are incorporating flexible solutions into their real estate strategies. co-working spaces
Serviced offices traditionally attracted small and medium-sized enterprises, together with multinational corporations that took up space for project teams, swing spaces, meanwhile, were originally filled with early stage start-ups seeking a creative hub that allowed flexibility to grow their business… and offered free beer!
The two have now blurred to the point of negligible differentiation, with coworking becoming more corporate and serviced offices more trendy. Hence the phrase ‘flexible workspace’ to encompass both.
There are some key reasons why this trend is set to grow:
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Start-ups and SMEs prefer flexible lease terms co-working spaces
In most conventional office spaces, a three-year lease is the norm. Lease terms are often ironclad, leaving tenants with little flexibility. This is problematic for start-ups and SMEs, which often have indeterminate staff sizes in their growing years. For example: Say you’re running a small business with just seven employees. There’s a chance – but not a guarantee – that you’ll need to take on as many as 10 more staff over the next three years. Do you then rent a small office sufficient for seven, or a larger one appropriate for 17?
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If you don’t grow as planned, you’ll waste a lot of money on rent. But if you do take up a smaller office and your staff does grow, you’ll be stuck with the small space for at least three years.
Co-working spaces don’t present businesses with such issues. First, their spaces are highly flexible; these can range from “hot-desking” for individual employees, to some businesses taking up a whole floor (e.g. Hootsuite at The Working Capitol).
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Pooled office resources
Start-ups are often in a boot-strapping scenario, where every dollar has to be stretched; and even established SMEs tend to be much more conservative with their budget than large corporations. This is where co-working spaces offer their next big advantage:
In these spaces, resources such as photocopiers, fully-equipped conference rooms, stocked pantries, and cleaning services are all shared. These pooled office resources lowers overheads, allowing small businesses to invest more in revenue-generating activities.
Also, many SMEs that invest in these resources may find them under-utilised. A small business that invests in a fully equipped conference room, for instance, may find it a waste when only two major meetings take place every week.
Co-working spaces thus provide a degree of cost-efficiency, which draws SMEs, start-ups, and especially sole proprietorships.
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Growing recognition of networking benefits
Co-working spaces often conduct seminars, link-up tenants with shared interests, and invite key figures like venture capitalists or business gurus to talk to tenants. This was once hand-waved as “fluff”, but it’s now considered a real strategic advantage.
In fact Enterprise Singapore (through its Plug and Play Network) has made an especial effort to reach out to co-working spaces in the region; this is to help local businesses break into those markets. There is growing recognition that co-working spaces serve a greater purpose than office space; they’re also catalysts for growth, and ideal for foreign companies trying to integrate.
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Rise of the gig economy and freelancers
When it comes to freelancers and the gig economy, many people think of Grab drivers or HonestBee helpers. But the gig economy also consists of people who need office space – illustrators, designers, writers, social media managers…the list is a mile long these days.
Many of them now realise a proper working address, and a regular place to meet clients, is essential – some businesses, for example, will never work with someone provides a home address and wants to meet at Starbucks (that attitude is also changing, but it will take time).
For these workers, renting a traditional office is often out of the question; but being in a co-working space could be a justifiable expense (not least because they often find jobs from other co-working space tenants).
