JustCo goes asset-light to support hybrid working
After a decade of being in the co-working industry, Kong Wan Sing, CEO and founder of local company JustCo, senses that there is little convincing left to do. “In the past, businesses worried about not having frontage or privacy when they shared a co-working space, but no more. You no longer need to explain what flex leasing is,” he says.
At the same time, the market share of flex spaces out of the total commercial space in Singapore is currently at only around 2% to 3%, so “the potential to grow is huge”.
Out of the three key categories of tenants at
JustCo — start-ups and freelancers, small and medium-sized enterprises (SMEs), and the big enterprises — SMEs are the late adopters but are also coming on board.
“SMEs are the toughest to convince, because the old ‘towkays’ still want their own dedicated space. But, Covid-19 has forced them to embrace new technologies and ways of working. For instance, they had to use Zoom for meetings and use applications like DocuSign. Their staff will also be requesting flexible work arrangements, so they have to respond to these changes,” Kong adds.
But change will take some time due to existing leases. “Our team is already talking to a number of SMEs who are considering coworking spaces, but some of them still have leases. When their lease expires this year or next year, that’s when they will act,” he says.
The most prominent category of tenants at JustCo consists of the big enterprises, which take up 50% to 60% of their 18 operational locations in Singapore.
The Centrepoint, one of JustCo’s newest locations launched in October last year, has welcomed L’Oreal and Tencent-backed Riot Games. Opened in partnership with Frasers Property, the 60,000 sq ft centre has currently achieved 70% occupancy within six months and also serves as the headquarters for JustCo.
JustCo’s new centre at Amarin Tower in Bangkok, which opened in June last year, is also at “healthy occupancy”. It welcomed Thai super app company Kasikorn Line and ByteDance-owned TikTok.
Work from anywhere
Work-from-home will not be the norm, Kong asserts, explaining that the home environment is not always productive. “Instead, the trend that will persist is ‘work-from-anywhere’, for instance, workers might prefer to work near home or their customers,” he adds.
It is the reason why JustCo partnered the world’s on-demand workspace platform Switch. Launched in December last year, Switch allows users to book work booths, enter JustCo centres or other shared office locations.
Currently, the proprietary Switch booths are in JustCo’s centres and in Frasers Property malls, at around 40 locations islandwide. Those in suburban locations, especially Westgate in Jurong East, are doing very well, shares Kong.
Although JustCo’s 18 operational locations are predominantly in the CBD, Bugis and Orchard areas, with only one centre at Westgate Tower in Jurong East, Kong says that the company is now adapting to the new trend and is seeking out suburban locations, such as Woodlands.
With the Switch platform, Kong says that he hopes to consolidate space providers in Singapore to enable users to work from anywhere.
Going asset-light
JustCo now aims to become asset-light by managing, rather than leasing, spaces.
“In the beginning, nobody knew about JustCo and co-working was a new concept, so I leased during the first era of our business. Now, we don’t lease because we want to manage spaces instead,” Kong says.
JustCo has signed a management agreement with T-Grand Property Holding, which owns and operates Asia Green in Tampines. JustCo will manage a 30,000 sq ft space that will be launched in 3Q2021.
“As a tenant, I will be concerned with my own interests. The landlord also sees me as just a tenant. There’s no synergy,” says Kong. “But as a space provider, I can bring more value and change how people work.”
The company will also be opening new locations at Razer SEA HQ in the 3Q2021, in close proximity to Fusionopolis, Biopolis and Mediapolis.
Kong says that the fact is that commercial tenants can reduce space without affecting their headcount as a result of flexible work arrangements.
Even within co-working spaces, this seems to hold true. According to data from research by Workthere, private offices or suites have seen a drop in prices of 6%, but the percentage of flexible office providers that are profitable has grown from 79% to 82% over the last year. Workthere is a Savills-owned platform that lists co-working spaces and private offices and allows users to book workspaces.
While traditional landlords are eager to provide a hybrid solution, they may face difficulties as it is not their core business, says Kong.
“But when landlords work with us, I can provide a hybrid arrangement. For instance, tenants can renew a smaller space, at a slightly higher rent, and landlords can offer credits for the tenants’ staff to access the JustCo space within the building or at other locations,” explains Kong.
“By managing spaces instead of leasing, we can bring more value. My vision is to change how people work and provide these services for people to work from anywhere,” he adds.
Tech-led design
To support the growth of the company in Singapore and in the region, Kong built an in-house design team two years ago. Currently, the 20man team works together with JustCo’s technology team, which is based in Singapore, Taiwan and China.
“Our design team doesn’t just design, they also incorporate a lot of data and technology to study usage and plan the spaces better, and some of this is proprietary information,” says Kong. “When you are in-house, you can live and breathe the product you produce. You can see the difference between our centres now and before.”
JustCo’s design team also consults for other external offices in Singapore.
At The Centrepoint, one of JustCo’s smarttech enabled workspaces, JustCo has engaged spatial analytics technology company SixSense to monitor space occupancy levels. Users can check occupancies on JustCo’s app before making their way down. Accessing the space is via facial recognition, which works without having to take masks off. The sensors will also remind users who are not wearing masks to do so.
There is also a fully automated cafe at the entrance, run by Ratio, where robots serve up coffee and cocktails. JustCo also joined in the Series-A fund-raising round of the robotic cafe and lounge start-up led by Frasers Property in February.
JustCo’s immediate next steps would be to focus on Japan, where the demand for flexible workspaces is growing fast. It opened .Base, which it manages, at Toranomon Towers Office in Tokyo in December last year.
Having opened around nine locations in 2020 and 1Q2021 despite the pandemic, the company is looking to open more locations in other key growth areas such as Australia and Korea. Singapore is still a high priority for JustCo, and Kong says that there will be more locations in the pipeline.