Demand growing for co-working space providers

Office developers should encourage co-working space providers to lease in their buildings, as these could be sources of future building tenants, a real estate services firm said.

Morgan McGilvray, Santos Knight Frank director for tenant representation told reporters co-working space providers are good tenants to have in office buildings in Metro Manila’s business districts.

“The thing about new buildings is that they tend not to have small spaces anyway so they’re going after big BPOs (business process outsourcing) a couple hundred feet. So, a co-working site is actually a good tenant for them, because a co-working site comes in and leases 500 square meters (sqm),” McGilvray said.

With co-working spaces targeting entrepreneurs or young professionals who have just started out, these individuals could be potential tenants of the building once they are able to scale up their businesses.

“You’ve got all these tenants in a co-working site in your building, and a few of those tenants might even form a huge company, and move out of coworking,” McGilvray said.

“They might be your next tenant for 400 to 500 sqm,” he added.

Santos Knight Frank said the co-working spaces trend has evolved over the past five years, since it first entered the Philippines, with the launching of Co Lab in 2011.

Before its entry into the country, professionals and small businesses were often forced to choose among leasing a traditional office space, renting a room from a serviced office, or working from within a coffee shop.

“But with the recent advent of co-working spaces, these tenants now have an alternative,” Santos Knight Frank said.

The property services firm cited the results of the 2017 Global Co-Working Survey, which showed the number of co-working spaces worldwide is seen to increase to 14,000 by the end of the year from the present 11,300.

“The global growth rate of co-working space users is projected to be 41 percent in 2017, reaching almost 1.2 million people,” Santos Knight Frank said.

From a local perspective, there are at least 30 co-working spaces in Metro-Manila, with majority concentrated in Makati (14), Bonifacio Global City (8) and Ortigas.

Santos Knight Frank chairman and chief executive officer Rick Santos said the co-working space trend is projected to further grow in the country, driven by the millennial population.

“We believe the co-working space trend will grow further, thus creating a relative impact to the office sales in the future,” Santos said.

“Millennials would soon be dictating the office market, its concepts and the growth of new businesses,” he concluded.