Co-working space has enjoyed tremendous growth in recent years, supported by the start-up boom; demand for greater flexibility among both employees and corporates.
Advances in technology allowing people to work anywhere at any time; and its appeal as a cost effective alternative to traditional offices.
Flexible co-working spaces are increasingly edging out the old guard of traditional serviced offices in Asia, according to several reports by commercial real-estate firm like Colliers International and CBRE.
Several reasons are suggested for the rise of co-working. The first is the growth of the millennial workforce, set to represent half of the global workforce by 2020.
Another factor is growth in the technology sector. The CBRE report highlights Fintech as an industry seeking “flexible, non-traditional solutions to meet the demands of their rapid growth.”
• There are around 300 co-working spaces located in Asia Pacific gateway cities including Hong Kong, Singapore, Shanghai, Tokyo, Sydney and Melbourne.
• Competition among co-working space operators is intensifying as they open more centres, lease larger spaces and increase their presence in prime areas. CBRE Research believes the key to running a successful co-working space is creating an experience; building a community; and facilitating business and learning opportunities for end-users.
• The rise of co-working space in Asia Pacific is encouraging occupiers to rethink their traditional use of office space. It is also prompting landlords to consider whether to lease space to co-working operators or develop their own co-working platform.
The rise of the millennial workforce
With the rise of the millennial workforce, which is estimated will make up 50% of the global workforce by 2020, and growth in the technology sector, in particular FinTech, more occupiers are seeking flexible, non-traditional solutions to meet the demands of their rapid growth.
Conventional lease terms of 3 to 5 years, commonly offered in Asia, do not fit in line with the pace of their growth.
Additionally, we are now seeing established MNCs seek flexible solutions and shorter lease terms to address the challenges they face within the current economic climate.
In the 2016 Hong Kong Budget, the Hong Kong Government allocated HKD 2 billion to fund and co-invest in Hong Kong startups. This will inevitably lead to further growth in the start-up technology sector and increase demand. This demand will not be satisfied in the
This demand will not be satisfied in the government-backed Cyberport – hence growth in the number of co-working space operators, albeit slower than in Beijing and Shanghai due to limited stock and traditional institutional Landlords holding a tighter grip on the office market.
Interestingly, Singapore is ahead of Hong Kong in the technology sector due to the regulation in place there helping stimulate growth.
However, we expect Hong Kong to catch up, particularly now that the Government are putting in funding and, of course, Hong Kong’s geographical location as a gateway to the Mainland will aid this growth once regulation issues are resolved.