IWG banks on multi-brand strategy for growth
By Timothy Tay
/ EdgeProp Singapore |
Chopra: We are an extremely client-centric organisation. Our location decisions are driven by our anticipation of clients’ needs, and our brand strategy is guided by the kinds of environments they would enjoy and thrive in. (Picture: Samuel Isaac Chua/EdgeProp Singapore)
SINGAPORE (EDGEPROP) - London-listed IWG, a global operator of office and flexible workspaces, is banking on its multi-brand strategy to expand its presence in Singapore. Over the past five months, its Spaces brand has opened in new locations – TripleOne Somerset, Clarke Quay, and Paya Lebar Quarter. The fourth and latest location is in the retail mall of One Raffles Place, in the heart of the financial district.
“Spaces is one of our fastest-growing brands worldwide, including in Asia, and demand is always high,” says Samit Chopra, executive vice-president for enterprise and sales at IWG. “Being in a thriving retail environment like One Raffles Place or TripleOne Somerset, which are mixed-use developments with office and retail elements, adds to the overall brand appeal.”
Spaces has opened a new co-working location at One Raffles Place (Picture: Samuel Isaac Chua/EdgeProp Singapore)
In addition, Singapore is the first city in Asia where IWG launched its premium corporate workspace brand, Signature by Regus. Located on the two penthouse levels of Asia Square Tower 1, the 75,347 sq ft space opened in June this year. It is a mix of office suites, co-working areas, meeting rooms, and a business lounge. The space can accommodate 1,165 desks.
IWG will also launch its luxury co-working brand No18 at Capitol Singapore next quarter. Occupying 20,600 sq ft in Capitol Piazza, the retail component of the mixed-use development, it will be the brand’s flagship location and first space in Asia. The space includes a members’ lounge and can accommodate 250 desks.
A No18 business lounge in Stockholm. The luxury flexible workspace brand will open its first location in Singapore next quarter. (Picture: IWG)
‘Real estate and talent strategy intertwined’
The rationale for IWG’s multi-brand strategy stems from the increasing importance employees place on their work environments. According to Chopra, corporate real-estate executives are not only looking at offering functional spaces for employees, but also considering how a flexible workspace strategy plays a part in a company’s overall talent attraction and retention strategy.
“That is the biggest change that has come about over the past 10 years, where real estate planning is now intertwined with the company’s talent strategy,” he states.
Chopra estimates that the flexible workspace sector will grow to about 30% of the global corporate real estate sector over the next decade, with demand increasingly driven by large corporate clients. Currently, Fortune 1000 companies take up about nine billion sq ft of global corporate real estate, and if 30% of that is turned into flexible space it would translate into demand of about 2.7 billion sq ft, he adds.
Over the past five months, Spaces has opened in new locations including Clarke Quay (Picture: IWG/Spaces)
“But in order for corporate clients to enter the flexible workspace sector in that big a way, the sector will have to adapt to the various needs of these corporate clients. That is where our multi-brand strategy fits with this increase in demand. We have several brands that align with the different levels within an organisation,” he says.
For example, No18 aligns with what corporate clients would expect for their C-suite and top management to occupy as flexible space, while Spaces and Signature by Regus are more aligned with the needs of the senior and middle management.
“We are also exploring different service propositions where we can utilise our expertise in building and operating flexible workspaces to bring a certain level of customisation, especially for large clients,” says Chopra.
“We aren’t trying to do a one-size-fits-all approach, because we recognise that each person working in a large corporation or a small business will have different ideas of how their workspace is supposed to contribute to their talent strategy,” he adds.
A typical office suite at Spaces One Raffles Place. (Picture: Samuel Isaac Chua/EdgeProp Singapore)
The new 35,000 sq ft Spaces at One Raffles Place takes up half of the floor plate in the second to fourth levels of the six-storey mall. Within Spaces is a café and lounge for its members.
Spaces at One Raffles Place will be the second co-working location by IWG in Singapore that is located within a shopping mall. The first was Spaces at TripleOne Somerset which opened in May this year.
Most of the office suites cater to small businesses with two to four people each. Although there are MNCs that want entire floors, the core demand in the CBD is from smaller enterprises or “sub-departments” of larger organisations and they, in turn, want small office suites, according to Chopra.
Acquisitions and divestments
In April this year, IWG inked a £320 million ($544 million) deal with TKP Corp, a Tokyo-listed provider of rented rooms and banquet halls, as part of a master franchise deal. Under the agreement, TKP has exclusive use of IWG’s 130 flexible working centres in Japan using IWG’s Regus serviced office, Spaces and OpenOffice brands.
Spaces is one of IWG’s fastest-growing brands worldwide. In Singapore, over the past five months, Spaces has opened in five new locations. (Picture: (IWG, Spaces)
On Aug 9, IWG entered into another master franchise agreement with TKP to divest its Taiwanese operations in a £22.7 million deal. IWG had operated 14 flexible working centres in Taiwan across its various brands.
“What sits at the back of those kinds of franchise deals is for us to be able to scale our global platform through partnership arrangements,” says Chopra. “It could either be a partnership on a site with a landlord, or a more broad-based partnership with a franchisee for an entire country.”
As part of IWG’s broad strategy, the company has added six new franchise partners and commitments for 180 locations, according to CEO Mark Dixon in IWG’s interim results report for 1H2019 posted on Aug 6. This brings the total number of franchise partners to 24 across different countries and commitments for over 300 locations, he added.
In Singapore, IWG announced last month that it is marketing franchise opportunities to investors interested in opening “clusters” of serviced offices in the city-state. The company is looking for partners which can “open and operate clusters of five or more centres over a two- to three-year period”. These partners would be able to franchise IWG’s Regus and Spaces brands.
The potential franchise opportnunity in Singapore includes IWG's Regus and Spaces brands. (Picture: IWG, Spaces)
IWG has also turned to acquisitions to fuel its expansion. In May this year, Spaces took over a 54,000 sq ft office space in Shanghai’s Infinitus Tower from co-working competitor Kr Space. The Chinese operator had defaulted on rental for the location, which allowed IWG to step in to operate its own flexible workspace there.
“We are an extremely client-centric organisation,” says Chopra. “Our location decisions are driven by our anticipation of clients’ needs, and our brand strategy is guided by the kinds of environments they would enjoy and thrive in.”
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