Coworking boom has no end in sight as prop­erty gi­ants launch their own spa­ces

There are around 110-120 op­er­at­ing flex­i­ble workspace cen­tres is­land­wide, and leas­ing de­mand is poised to hit 550,000 square feet in 2018.

Singapore Business Review - - CONTENTS - San­dra B. Sendin­gan

With Sin­ga­pore eas­ily be­ing one of the most open mar­kets in Asia-pa­cific for flex­i­ble workspace ar­range­ments thanks to a thriv­ing startup cul­ture and the govern­ment’s sup­port for in­no­va­tion and en­ter­prise, leas­ing de­mand is poised to hit 550,000 square feet in 2018 as a grow­ing num­ber of cor­po­rate iden­ti­ties are jump­ing in on the coworking band­wagon.

“The de­mand for coworking or flex­i­ble workspace—led ini­tially by star­tups, free­lancers, and tech firms— has grown sub­stan­tially since 2015 as large busi­nesses em­brace the shar­ing econ­omy,” Col­liers In­ter­na­tional head of of­fice ser­vices Dun­can White told Sin­ga­pore Busi­ness Re­view.

No signs of slow­ing down

There are around 110-120 flex­i­ble workspace cen­tres in op­er­a­tion is­land­wide, with around three quar­ters sit­u­ated in the cen­tral busi­ness district. The spa­ces oc­cupy 3.9% of the pre­mium and Grade-a of­fice space or around 944,000 square feet of net let­table area, rep­re­sent­ing a 36% surge since 2016.

Lo­cal and in­ter­na­tional op­er­a­tors alike are leav­ing no stone left un­turned in root­ing out the nec­es­sary space to de­velop coworking set­ups amidst a boom­ing de­mand for al­ter­na­tive work ex­pe­ri­ences. As­sets like re­tail podi­ums and grade-b of­fice build­ings may even be repo­si­tioned to make room for coworking oc­cu­piers amidst limited land bank in the lion city and se­cured ex­clu­siv­ity clauses, White noted.

The lion city’s ris­ing of­fice rents are sim­i­larly poised to fuel de­mand for coworking strate­gies with Grade A of­fice space prices ex­tend­ing its climb at 1.3% QOQ in Q1 or at a monthly rate of $9.06 per sq ft.

“Ad­di­tion­ally, Sin­ga­pore’s high rents will con­tinue to stoke the adop­tion of coworking strate­gies due to sus­tained cost ad­van­tages,” said Si­grid Zial­cita, man­ag­ing direc­tor, Re­search, Asia Pa­cific for Cush­man and Wake­field. “More and more, cost con­tain­ment strate­gies will ne­ces­si­tate in­cor­po­rat­ing flex­i­ble work­ing

Ris­ing of­fice rents are poised to fuel de­mand for coworking strate­gies

ar­range­ments to man­age real es­tate foot­print.”

To avoid be­ing out­paced, Sin­ga­pore’s blue chip prop­erty de­vel­op­ers are also jump­ing in on the coworking trend, ob­served Zial­cita, with Maple­tree In­vest­ments un­veil­ing its coworking space called Co­qoons, Cap­i­ta­land launch­ing its own brand Flexi Suites. Kep­pel Land also estab­lished its own coworking brand Kloud whilst As­cen­das-singbridge’s has the­bridge as its flex­i­ble workspace so­lu­tion.

“Coworking and Cor­po­rate

Real Es­tate are stronger to­gether,” Zial­cita noted. “Es­tab­lish­ing their own coworking of­fer­ings serves to pre­serve its rev­enue base rather than risk a seep­age which will hap­pen if a ten­ant bases part of its op­er­a­tions at a com­peti­tor’s coworking space,” she pointed out.

When big play­ers en­ter the fray

As a grow­ing num­ber of op­er­a­tors aim to cash in on the heated coworking trend and jos­tle for mar­ket share, play­ers are ded­i­cat­ing en­ergy and re­sources to dif­fer­en­ti­at­ing their con­cepts, space de­sign, as well as the com­mu­ni­ties they sup­port. For in­stance, there is Tree­haus, which is Sin­ga­pore’s first shared of­fice with child-mind­ing fa­cil­i­ties.

Pa­per­work at Na­tional De­sign Cen­tre is sim­i­larly brand­ing it­self as the de­signer’s co-cre­ation space boast­ing Vir­tual Re­al­ity equip­ment to pro­vide ten­ants with 360-de­gree ex­pe­ri­ence of how a de­sign pro­ject will look like upon com­ple­tion, ac­cord­ing to Ong Choon Fah, CEO and head of re­search & con­sult­ing at Ed­mund Tie & Com­pany.

“There is an in­creas­ing dif­fer­en­ti­a­tion of the dif­fer­ent op­er­a­tors, as they build out their coworking space to suit their seg­ments and also adapt to the needs of their ten­ants,” noted Ben Eck­blad, co­founder of workspace mar­ket­place Go­ril­las­pace.co.

Multi­na­tional firms are also mak­ing ded­i­cated ef­forts to re­design their work­places in a bid to stay com­pet­i­tive against up-and-com­ing flex­i­ble workspace op­er­a­tors.

“For most cor­po­rate oc­cu­piers, coworking has be­come a busi­ness so­lu­tion, not just a real es­tate al­ter­na­tive; com­pa­nies to­day re­al­ize that workspaces can be a tool to en­gage its work­ers and at­tract new tal­ent,” said Zial­cita. For in­stance, in­sur­ance firm Pru­den­tial Sin­ga­pore’s new of­fice, PRU Work­playce, fea­tures an open am­phithe­atre and col­lab­o­ra­tive work zone for em­ploy­ees.

Unilever’s Level 3 in Maple­tree Busi­ness City also serves as a base of op­er­a­tions for star­tups as well as a space where teams can visit and con­nect with com­pa­nies and ideas they find in­ter­est­ing. “the qual­ity of fit-outs is get­ting bet­ter. In the be­gin­ning, there was lit­tle at­ten­tion paid to “quiet work” or fur­nish­ings. There is much at­ten­tion paid to meet­ing rooms and phone booths. The qual­ity is def­i­nitely much bet­ter than it was even a year ago,” ob­served Ecblad.

A few other flex­i­ble workspace ex­am­ples in the fi­nan­cial ser­vices in­dus­try in­clude the Lu­men­lab, a 7,800-sq ft in­no­va­tion cen­tre by Metlife and OCBC’S The Open Vault, a 2,400-sq ft fintech in­no­va­tion cen­tre by OCBC bank.

In re­tail, coworking spa­ces are also sprout­ing up as Justco opened its lat­est space in Ma­rina Square Shop­ping Cen­tre. Wework also has plans to un­veil a space in Fu­nan’s re­tail com­po­nent in the com­ing months. “We can ex­pect to see con­tin­ued evo­lu­tion of dif­fer­en­ti­ated ser­vices and niches of­fered within the phys­i­cal space, the mem­ber­ship com­mu­nity, and also the tech plat­forms of­fered by the op­er­a­tors,” White said.

Against a back­drop of strong govern­ment sup­port and ea­ger mar­ket take up, the coworking trend in Sin­ga­pore shows no sign of slow­ing down with to­tal coworking stock driv­ing 15% of new de­mand for pre­mium of­fice spa­ces in the is­land last year. Around 11 spa­ces are ex­pected to be rolled out within the year or by 2019, said Ed­mund Tie & Com­pany’s Ong. “Be­tween them, we ex­pect Justco, Wework and Re­gus to open six more spa­ces in the com­ing months,” ac­cord­ing to Zial­cita as the mar­ket ma­tures to­ward con­sol­i­da­tion and larger play­ers con­tineu to ease smaller op­er­a­tors through M&A’S such as when Wework ac­quired Naked­hub.

“Coworking is now al­most a sta­ple. With in­ter­est in the seg­ment still strong, coworking op­er­a­tors have am­ple fund­ing from in­vestors; de­vel­op­ers are also keen to es­tab­lish strate­gic tie-ups,” she added.

“What started out as a dis­rup­tor and an al­ter­na­tive to tra­di­tional of­fices is now a fun­da­men­tal part of the com­mer­cial real es­tate mar­ket,” said White.

Even real es­tate gi­ants are jump­ing in on the flex­i­ble workspace trend

the­bridge

Source: Valuepen­guin

Justco Ma­rina One West

Ong Choon Fah

Ben Eck­blad

Si­grid Zial­cita

Dun­can white

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