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Coworking spaces set to proliferate and become a real estate asset class
COWORKING spaces are set to multiply across Singapore in the near term and become a real estate asset class.
While there are already more than 50 such spaces here, observers point to a young, still-growing and competitive market as new types of coworking operators emerge and existing ones launch new spaces.
Homegrown operator JustCo, for instance, is slated to open two branches at the recently-completed UIC Building and the upcoming Marina One in 2017. Chinese coworking operator Distrii will launch a space at Republic Plaza in 2018 in what is its first international foray.
The growth is in line with a marked rise in "flexible working environments" in the Asia-Pacific, a region where demand for coworking spaces will expand at an average rate of 10 to 15 per cent annually, according to an April coworking report by Cushman & Wakefield and CoreNet Global.
Observers said that this demand is fuelled by an increased appetite from companies for workspaces that offer speed and flexibility in a time of global economic uncertainty, and that will allow them to grow or downsize as needed without being locked down by long-term rent.
Chris Browne, head of global occupier services (Asia-Pacific) at Cushman & Wakefield, said: "Traditionally, businesses were constrained by the time and cost of acquiring and fitting out new premises.
"The shorter leases and competitive costs of these spaces provide options for businesses wishing to scale up either at speed, on a project basis, or for a temporary period."
Coworking spaces are typically 10 to 30 per cent cheaper than traditional office spaces; they are also well-designed, close to amenities and attractive to the millennial workforce, according to the same report by Cushman & Wakefield and CoreNet Global.
In another study, millennials are found to make up 75 per cent of the global workforce by 2025.
Turochas Fuad, chief executive officer of Spacemob, one of the latest entrants to the Singapore coworking market, said that millennials seek colourful, creative spaces that encompass a wide range of work philosophies and talent, from which they can draw inspiration and learn.
He told BT: "Coworking spaces deliver well on these promises, and will be a mainstay in the years ahead."
Jen Lee, marketing executive of Collision 8, a coworking space that launched last July, added that such spaces are no longer just for startups and small businesses. "Corporates, investors and non-profits are looking to engage in coworking as they see the benefits of being connected to a larger community."
But medium-sized companies or firms that require a high degree of client confidentiality (such as those in the finance and legal sectors) may be less keen on such spaces.
Christine Li, research director at Cushman & Wakefield, said this could be due to an absence of corporate branding and lack of privacy in coworking spaces compared to traditional offices.
That said, Singapore's Smart Nation initiative and its ambition to create an innovation-based entrepreneurial ecosystem may continue to drive demand and the proliferation of coworking spaces in the coming years, Ms Li noted.
The coworking sector has attracted deep financing - said to be in the millions of dollars - from venture capitalists and investors. Spacemob in November raised US$5.5 million in seed funding, believed to be the largest such round in South-east Asia.
Jaelle Ang, co-founder of The Great Room Offices, a hospitality-inspired coworking space, told BT: "Coworking spaces will establish itself as a rising real estate asset class, just like hotels and serviced apartments did, if it hasn't already."
Not all coworking spaces are the same. To stand out from the pack, operators are differentiating beyond splashy interiors, a variety of workstations and well-stocked pantries.
Spacemob uses a technology-first approach: it has developed a proprietary "operating system" that allows it to run and manage a coworking space and connect with its members.
The Working Capitol holds educational and networking events to create a "community experience" for its members, while Impact Hub, a pioneer of coworking in Singapore, has a S$1 million fund to invest in early-stage startups.
The Work Project says it is the only company that offers unlimited 24/7 use of its spaces (including small meeting rooms) under its basic membership package.
David Wong, CEO of Booqed, an app that lets users book work spaces across Asia, said that coworking spaces are increasingly "designed to address different niche users". While some are great for creative professionals or tech startups, there are those that cater to parents who want their children nearby and taken care of while they work in the adjacent room.
He said: "Space is no longer just a venue; it actively contributes to the (work) experience."