When job search engine Indeed opened a product development centre in Singapore at the start of this year with just one staff member, it decided to secure co-working space for up to 15 people.
In June, it upgraded to a office suite for up to 50 people, and by November, it is looking to move to an even bigger dedicated office space for 150 staff — all within the co-working space at WeWork’s Beach Centre.
Unlike its business arm which leases an office space at OUE Bayfront, the product development team opted to work with WeWork for greater flexibility.
“No one could have predicted how fast we would grow,” said the centre’s director Jordan Dea-Mattson. “(Co-working spaces) give us the flexibility to scale up or down in dynamic situations… it’s the flexibility, the opportunity costs that you don’t pay. There are huge costs to underestimating, and huge costs to overestimating (real estate needs).”
Indeed’s Singapore Engineering Centre is among a growing number of corporations that have started moving into co-working spaces, which until recently, were mainly used by freelancers or entrepreneurs.
CORPORATES FUELING GROWTH
A report by real estate consultancy Cushman & Wakefield in February showed that increasing demand from corporate occupiers has been the main drivers for the growth of co-working spaces in Asia over the last two years, including Singapore. Correspondingly, the share of freelancers and independent workers has dropped by nearly 15 per cent over the last three years.
Up till the end of last month, co-working spaces make up 27.1 per cent of total office leasing demand in Singapore, a huge jump from the 14.7 per cent last year, and 6.9 per cent in 2016, based on Cushman & Wakefield’s data.
Including serviced office locations, the number of operators have doubled to 36 since 2015, and the number of locations have increased by 71 per cent over the same period.
Serviced offices, which come fully furnished with flexible lease periods, are another flexible workspace option. While tenants share resources, it does not have common spaces for extensive collaboration between tenants, which co-working spaces offer.
Another report by Colliers International released on Monday (Sep 10) showed that the office area taken up by flexible workspace operators registered the steepest annual growth for the sector last year — surging 44 per cent to a record 680,000 sq ft of space.
Total flexible workspace footprint has nearly tripled — from 1 million sq ft to 2.7 million sq ft — since the end of 2015 to the end of June this year. Colliers expects it to rise by 30 to 35 per cent (or about 670,000 sq ft) year-on-year for 2018.
An interesting trend noted by Colliers is that while 84 per cent of flexible workspace are located in the central business district (CBD), some have started popping up in the fringes of the CBD and also Orchard Road.
The growth of such co-working spaces could be a boon to small- and medium-sized enterprises, which may now have the option to take up offices in choice locations or premium buildings that may previously be inaccessible to businesses with smaller square footage.
New York-based WeWork, which launched its first co-working location at Beach Centre in December last year, has opened six more locations across the island in the last eight months. And it has plans for more.
It declined to reveal the total area which it operates in Singapore, but said the company currently occupies over 18 million square feet across its locations around the world, with corporates forming 25 per cent of its members globally.
Hong Kong-based The Work Project opened its sprawling 21,000 sq ft space at OUE Downtown in June last year, while homegrown company JustCo, which opened its first co-working space in 2015, has expanded to eight locations in Singapore.
JustCo now occupies close to half a million sq ft across all its 12 locations spread across South-east Asia — a 13-time increase from its very first office in Robinson Road. Its founder and chief executive officer Kong Wan Sing said that almost a fifth of its clients have more than 10 employees.
WeWork’s South-east Asia managing director Turochas Fuad said: “Back in 2010, our first members were small-scale startups… As WeWork’s global footprint grows, so does the appeal to multinational corporations. We are seeing increased interest from multinational corporations.”
To keep up with increasing demand, JustCo has set up a team to help large enterprises design and manage workplace solutions.
“Corporates are more receptive to adopting the flexible, shared workspace concept, with large companies that traditionally had their own corporate spaces starting to experiment with co-working with specific departments, and regional offices testing out the concept — we see this as a promising sign for the future of the co-working industry,” he added.
Cushman & Wakefield’s head of research Christine Li also expects corporate demand to continue to increase, as companies try to increase the efficiency of their staff through flexible workspace environments.
“Large corporates are increasingly partnering co-working operators who offer enterprise solutions to keep abreast of the technological innovations and potential disruptions in the industry. Renting spaces in the co-working setup could also help them save a substantial amount of capital expenditure and is a good strategy to retain talent,” she added.
A SPACE TO NETWORK AND COLLABORATE
Several companies located in co-working spaces told TODAY that one of the main attraction of a co-working space is the ease of being able to network and connect with others in the same space.
Property group Lendlease relocated its Asia headquarters to a co-working space in June last year as an interim arrangement before moving into its own space at Paya Lebar Quarter later this year.
According to its Singapore office managing director Ng Hsueh Ling, its co-working office at The Work Project enabled the 100-strong team “to promote an innovative and collaborative culture, and network with like-minded individuals located within the space”.
“Staff have shared that there is more interaction and collaboration among colleagues, with a heightened sense of community,” she added.
Ms Carrie Liauw, founder of events management company Tabula Rasa, said that she specifically chose to locate her three-year old firm in a co-working space as she wanted to be in an environment that “allows networking with other people”.
Currently located at WeWork’s location at 8 Cross Street, Ms Liauw said she wanted to run her company of seven people like a start-up.
“Being around people who are innovative gives us a lot of inspirations, a lot of opportunity to learn new things,” she added.
Ms Liauw also shared that the collaborative nature of being in a co-working space has translated into branding opportunities as she has been invited to several panels, where she could share her entrepreneurial journey.
In the case of e-commerce firm Fave, which signed up to be a member at JustCo’s Marina Square location, the networking opportunities available in a co-working space have led to business deals being struck.
Fave Singapore’s business development manager Cheryl Lim recounted an incident where another tenant who runs an interior design firm approached one of Fave’s staff to find out how he could market his company.
“He confirmed (the advertising solutions) package on the spot with me. That’s the bond we have (with others) in a co-working space,” she added.
Aprat from business opportunities, some of these managers and staff TODAY spoke to also highlighted how being part of a community has strengthened the ties between tenants of the co-working space — from organising a Christmas event to raise funds for Syrian refugees to something as simple as a basketball game after work.
Cost savings was another benefit commonly cited by the companies interviewed by TODAY for turning to co-working spaces.
For example, without citing numbers, Mr Albert Pang, the managing director of marketing and communications company Mercury’s public relations arm, said there were “great savings” in moving his team of over 20 people from a shophouse in Telok Ayer to The Work Project.
By doing so, his company does not need to pay for utilities, wireless technology, cleaning services and other miscellaneous services that are required in a traditional office lease.
Fave Singapore’s managing director Ng Aik-Phong concurred, adding that renovation and reinstatement costs for renting a traditional office set-up could chalk up huge amounts of money. That was the reason the start-up with over 50 staff, opted to take up the co-working space option when its office lease at UE Square came to an end.
Being able to share resources such as conference rooms and a cafe also means more efficient use of otherwise expensive real estate, with Mr Ng estimating that his costs have been reduced by 30 to 50 per cent.
“I don’t have to have an oversize office space for the occasional town hall, or the occasional external event… It’s on-demand usage,” said Mr Ng.
Source: Today – 10 Sep 2018