SINGAPORE (EDGEPROP) - The impact of the Covid-19 pandemic is forcing some co-working tenants to rethink their corporate real estate requirements over the next few years. This is affecting moderately-sized co-working operators such as Australian-based workplace solutions company ServCorp, and the small- and medium-sized firms it targets.
ServCorp says that some of its larger corporate tenants are looking to switch to a serviced office solution while retaining work from home arrangements for most of their staff. But smaller firms which have been hard hit by the economic fall out are likely to downsize their office space or switch to a virtual office solution instead, the workplace provider says.
ServCorp has established a modest presence in the local co-working market, operating five prime office locations in the Central Business District. The operator offers serviced offices and co-working spaces in CapitaGreen, Six Battery Road, Marina Bay Financial Centre Tower 2, The Metropolis Tower 2, and Suntec Tower Three.
Before the Covid-19 pandemic hit Singapore, ServCorp had an average office occupancy of about 80% and the company was on track to hit 90% occupancy this year, says Anna Chavez, ServCorp general manager for China and Southeast Asia.
She says that ServCorp tends to target companies with a headcount of up to 10 people, and does not typically market itself to enterprise clients. “Our unique proposition in the Singapore market is our range of multinational corporate infrastructure that small businesses can utilise to get an edge in the market. We also value our high-quality staff support and IT infrastructure that sets us apart in the market,” says Chavez.
The company managed to stay open during the “circuit breaker” period — Singapore’s own version of the Covid-19 lockdown which ran from April 7–Jun 1 — when most non-essential firms and services stayed closed. But it still saw a 5–10% dip in average occupancy during the circuit breaker period.
“We were very fortunate that our communications service infrastructure enabled us to be listed as an essential service for our business clients during the circuit breaker. This meant that we worked closely with our clients on their business contingency plans, including call handling services and corporate mail services,” says Chavez.
Over the past two months, ServCorp says that its clients business arrangements have changed to accommodate the new safe distancing and remote working arrangements. This includes reworking call handling instructions as most clients started working from home. In addition, “due to Covid-19 retrenchments, many companies (who are our clients) had to downsize, and this changed their team members and point of contact,” says ServCorp. The office provider also utilised its IT team to help its clients remotely access their office network through virtual private networks.
Strict safe distancing measures in Singapore also meant that some clients required more space to accommodate split team arrangements, says Chavez. The company was able to easily accommodate this as its office spaces are centrally located and in relatively close proximity in the CBD, she says.
“For example, we have a client, an energy company based in the CBD, who took 10 co-working solutions from us for their team of 20 in Singapore. This allowed them to rotate teams working from home and office on a roster basis. The roster was prepared by a ServCorp manager and the team books their desks in advance to ensure there will be no over/under usage of availability,” she says.
Another client who was initially working from a traditional office space in the CBD had to arrange a split-team work arrangement for its nine employees. They eventually took out a private space with ServCorp on top of two hotdesk passes, and they rent a meeting room twice a week to collaborate, says Chavez.
A different company gave up their traditional office in the core CBD to let their staff work from home, but took out two hot deskpasses and a virtual office package with ServCorp.
Overall, ServCorp says it has benefitted from a bump in demand of flexible workspace as a direct result of split team work arrangements and safe distancing mandates. The company says that two more clients in Sydney and three other clients in Melbourne have also sought help from ServCorp to accommodate an increased workspace requirement.
Chavez says that the coworking industry in Singapore has likely gone through the worst of the economic impact of the pandemic this year. She expects the coworking market in Singapore to remain generally stable, although it may take longer than usual to close new deals with new clients, and a very small number of existing ServCorp clients may forfeit their leases.
“Depending on the strength of the national response, the Covid-19 pandemic is impacting the reopening efforts of different countries at a different rate. For example, we feel that the situation is relatively tougher in Australia, while some of our Singapore clients are looking to downgrade their office solutions and opt for more split spaces,” says Chavez.
She points out that in China and Thailand, the coworking sectors there are operating at business as usual with enquiries almost back to normal levels. But ServCorp is still facing tough competition in Kuala Lumpur due to relatively high vacancy rates for Grade B offices.
In terms of its commercial office leases in Singapore, ServCorp says that it is already running several long term running leases for its spaces in Singapore. The office provider chose not to comment regarding any rental support it may have given to tenants. However, the company says it continues to support its clients which could include some form of rental relief.
According to a company spokesperson: “We are dealing with this on a case by case basis and it is a sensitive topic to all our clients. Our decision is subject to the size of the company, its tenure, the industry type, and individual business situation”.
“Singapore enjoys a relatively mature co-working sector that is supported by price sensitive office tenants. We continue to search for exclusive locations in the CBD area to expand, but we also believe that a high-quality value proposition is the most important proposition for us at this time,” says Chavez.
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