Get ready for the dynamic workplace: Work from home, work at the office

Get ready for the dynamic workplace: Work from home, work at the office

SINGAPORE (EDGEPROP) - Through the Covid-19 crisis, all of us have been able to cope with working from home (WFH) with some resemblance of productivity. It is largely because of the professional and social capital that we have accumulated before, when we could meet face-to-face to solve problems, generate ideas, build trust or inspire each other. But as the months pass, it is obvious that this continual drawdown is slowly eroding our social capital, and we are in desperate need of a top-up. We are definitely coping but we are not thriving.

 

The Great Room - EDGEPROP SINGAPORE

The Great Room at One George Street (Photo: The Great Room)

 

Now that WFH actually works (sometimes), not only do CEOs have control and flexibility over work, but everyone else too. If CEOs want their teams to win, they must first win the war for talent and crack the code to get the most out of an engaged, high-performing and connected team. It’s all about giving employees the freedom to choose where they work, when they work, and how they work best.

Around the world, debate is still raging on whether the office is finally dead. Narratives are radically different: Some 84% of French office workers are back at their desks, but less than 40% of Britons are. Twitter says company staff can work from home “forever”, but Netflix has decided that WFH is “a pure negative”. In late August, Pinterest paid US$90 million ($123 million) to end a new lease obligation on an office space near its headquarters in San Francisco to create a “more distributed workforce”. That same month, Facebook signed a new lease on a 730,000 sq ft building in Manhattan, adding to its existing 2.2 million sq ft. Bloomberg is reportedly offering a stipend of up to US$75 a day to get workers back to its building in London. 

I am of the view that WFH is here to stay. And so is the office. There is no conflict between the two. 

While the global pandemic has radically changed the way we work, the fundamentals behind what makes good work remain the same: positive human engagements, inspiring interpersonal relationships and empowering arrangements. Even while companies are discovering the upsides of a remote workforce, the office remains an important space for human experiences — one that allows individuals to function as a company.

 

The Great Room at Raffles Hotel - EDGEPROP SINGAPORE

The Great Room at Raffles Hotel Arcade opened last year (Photo: The Great Room)

 

Beyond work culture and a business, a company is really a collective of people who share the same ethos, purpose, world view and sometimes, tastes. Within the office, we don’t just work together; we learn from, and influence, each other.  

No doubt, as companies incorporate more dynamic work policies, overall office footprint will shrink and become more distributed. Office space will need to be more flexible too. 

Offices and, to an even larger extent, co-working spaces, are the modern agora. In today’s office — especially in the best of co-working spaces — you see a plethora of painstakingly curated events covering learning, motivation and well-being. Such sessions can be conducted virtually, but when everyone has spent the day on Zoom calls, it is inevitable that we will be less receptive to doing another learning or social session facing the screen. 

Such sessions are also where “casual collisions” happen. I met my now dear friend and mentor, Mark Edelson, founder of luxury hotel and resort brand, Alila Resorts, while fumbling at a coffee machine. That led to a two-hour conversation where I earnestly took down notes about his venture-building journey. 

And the water-cooler chats? I actually believe that everything the boss needs to hear but never hears, happens within 5m of the water-cooler at the office. 

 

The Great Room at Ngee Ann CIty - EDGEPROP SINGAPORE

The drawing room of The Great Room at Ngee Ann CIty (Photo: The Great Room)

 

Offices are the physical conduit for the building of relationships, trust and rapport; valuable communities where the friction of ideas can spark the solution your business needs in these challenging times; and it’s a place for spontaneous engagement, deep collaboration and heightened productivity.

People crave face-to-face, social interactions more than ever. Companies and teams need dynamic and activity-based spaces for collaboration, interaction with colleagues and clients, as well as building culture in a local environment. 

Returning to work is going to be far more complex than the rapid exit that we all made from our offices. Whenever the necessary return is done, there will be an acceleration of all the trends we have seen for so long in the commercial office sector; and all the opportunities it throws up for the creation of the workplace of tomorrow.

The late great Formula One racing driver, Ayrton Senna, once said: “You cannot overtake 15 cars in sunny weather … but you can when it’s raining.”

The pandemic, for all its ill-effects, has a sunnier take too. What a great opportunity it is for us as business decision-makers to rewire how we see the future of the workplace and to accelerate all that we have been merely paying lip service to: 

 

The Great Room at Raffles Hotel Arcade - EDGEPROP SINGAPORE

The work hall of The Great Room at Raffles Hotel Arcade (Photo: The Great Room)

 

#1 Wellness at the workplace

Safe distancing, addressing recirculated air and reduction of high touch areas — these are safety protocols that have to be taken into consideration as we plan for the return to the workplace. Beyond the table stakes, we need to provide wellness programmes that span the domain of physical well-being, mental resilience, body confidence, nutrition and motivation.

 

#2 Digitalisation, automation and Internet of Things 

Tough competition and fragile margins have discouraged many flexible office operators from investing in technology beyond building access, meeting booking platforms, community communication and space management software. There is a real opportunity for newer and more accessible technologies based on Internet of Things, mobile and AI platforms for better design, management and service delivery that can digitally transform the workspace exponentially.

 

#3 Eco-friendly and sustainable design

Not using system furniture and garish strip-lighting is no longer enough. Great design also means building with much more sustainable materials, recycling items that can yield a second life, substituting plastic when it makes sense to, and bringing in greens to refresh the air.  

 

#4 Seamless new membership plans

The idea of the workspace now needs to transfer seamlessly between the physical and virtual worlds — from a conducive office for deep work to virtual conferences and video conferencing to peer support. The need for greater flexibility goes beyond providing membership plans: co-working operators now have to help companies strategise companies’ space and team needs.

Some companies may be thinking of taking less space for now, but with the flexibility of future expansion once the economy revs up; or having their staff distributed across several locations. But far more valuable than that are companies looking to redesign their offices into a dynamic co-working-like space; or better yet, move right into a co-working space as a place for employees to bring their best energy and ideas to office each day. 

 

Jaelle Ang -EDGEPROP SINGAPORE

Jaelle Ang is the co-founder and CEO of The Great Room

 

 

 

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[UPDATED] Post-merger, Savills to focus on growing recurring income business

[UPDATED] Post-merger, Savills to focus on growing recurring income business

SINGAPORE (EDGEPROP) - The merger between Savills Residential, the residential project sales business of Savills Singapore, and real estate agency Huttons Asia has fortified the position of Singapore’s fourth biggest real estate agency in terms of number of brokers. The deal, according to Chris Marriott, Savills CEO for South East Asia, had been on the cards for some time. “And now, we’ve been able to construct a deal where everybody’s happy and it drives positive outcomes,” says Marriott. “It enables us to really focus on the future; to assist in building up Huttons’ business alongside Savills’.”

 

MARCUS LOO CHRIS MARRIOTT - EDGEPROP SINGAPORE

Marcus Loo, CEO of Savills Singapore and Chris Marriott, CEO of Savills South East Asia (Photo: Samuel Isaac Chua/EdgeProp Singapore)

 

The combined entity, “Huttons — in association with Savills” will benefit from economies of scale. “It is inefficient to have two brands,” adds Marriott. “In order to be a successful residential broker today, you need to increase investment in broker numbers, talent, technology and training.”

As Huttons’ largest shareholder, Savills Singapore will have board representation through Marriott. “We’ve had a long-standing relationship,” he says. It is a relationship that has spanned more than 15 years. When Savills acquired Hampden Real Estate from Michael Ng in 2005, the former took over the 48% stake in Huttons that he owned as well. Founded in 2002, Huttons was a fledgling company then, Marriott relates. 

With the residential project business now wholly under Huttons, this means that Savills Singapore will focus on “full-service real estate business”, says Marriott. 

Marcus Loo, CEO of Savills Singapore, will continue to build the Singapore business, while Marriott focuses on the Southeast Asian business. 

Loo was appointed CEO of Savills Singapore in January 2019. He had joined Savills Singapore in February 2015 as executive director and head of the tenant advisory division. He brought along his tenant representation team, comprising Greg Marler and Ashley Swan, in the move from Colliers International to Savills.

 

Jeremy Lake - EDGEPROP SINGAPORE

Jeremy Lake, veteran in investment sales, joined Savills as managing director of investment sales and capital markets (Photo: Savills)

 

Another team that made its way from Colliers to Savills later that same year (in September 2015) was Cynthia Ng, the head of valuation and deputy managing director, and seven other valuation specialists. Ng is now managing director and head of valuation & advisory at Savills Singapore. 

More recent hires include Eric Teo, previously the head of transaction advisory services group at Ernst & Young (EY) in both Singapore and Australia. Teo joined Savills in January 2019 as head of business valuation and advisory for South East Asia. Joining him at Savills are EY colleagues, Jason Doan and Jason Tan, both of whom are executive directors in the valuation and advisory business. 

In January 2019, Robin Leow, former head of integrated facilities management at Bintai Kindenko, a mechanical and electrical engineering specialist firm, made his way to Savills Singapore too. He is now installed as its senior director and head of facilities management. 

Last November, Savills announced two key appointments: Jeremy Lake and Galven Tan as managing director and deputy managing director of investment sales and capital markets respectively. Prior to Savills, Lake and Tan were in similar positions at CBRE. “That was really to cement our position as a leader in investment sales,” says Marriott.

Earlier this month, Savills announced the appointment of Tang Chee Charn as executive director and head of property management business. Tang is the former head of real estate management services at Colliers International. 

 

shipping containers south korea - EDGEPROP SINGAPORE

Key growth markets in the logistics and supply chain business in Southeast Asia are Indonesia, Malaysia and Vietnam; while in North Asia, it is Japan, South Korea (pictured) and Taiwan (Photo: Bloomberg)

 

“If we stood back and looked at Savills’ broad strategy, it is to continue building the platform in Singapore, with a strong focus on our recurring income business: property management, facilities management, professional valuation and consulting services in addition to our strong agency business,” says Marriott. 

Savills continues to be in the market for talent, although “very cautiously” given the current environment, notes Marriott. “Notwithstanding that, we are always on the lookout for talent, and we will always consider opportunities that add value to our platform of generating accretive returns.” 

Areas where Savills continues to see growth include logistics, student accommodation and data centres. Three months ago, Savills signed a cooperation agreement with Malaysian-based logistics and supply chain specialists, LCA Asia. It is a regional alliance between the two firms, says Marriott. Key growth markets in the logistics and supply chain business in Southeast Asia are Indonesia, Malaysia and Vietnam; while in North Asia, it is Japan, South Korea and Taiwan.

It’s not just the exponential growth in e-commerce that is powering the logistics business. Major manufacturers and suppliers are “multi-sourcing” instead of being reliant on just one vendor or one location in order to minimise risk of disruption, says Marriott. 

 

YANN DESCHAMPS - EDGEPROP SINGAPORE

Yann Deschamps, head of Workthere Asia Pacific moved from Savills Shanghai to Singapore to launch Workthere in March 2018 (Photo: Samuel Isaac Chua/EdgeProp Singapore)

 

Three years ago, Savills launched a new agency service, Workthere, in the UK. It is a search engine and aggregator of co-working and serviced office spaces. Workthere was launched in Singapore in March 2018. Yann Deschamps, who was head of Workthere Asia Pacific since Nov 2017, left recently, and is now commercial director of co-working operator Arcc Spaces since September.

Workthere focuses on the local flexible workspace market, featuring well-known brands such as JustCo, Servcorp, The Great Room, The Work Project and WeWork. “It’s opportune for SMEs [small and medium-sized enterprises] to leverage the co-working and serviced office community, especially if they are unsure as to the scale and size of their business,” says Marriott. “We’ve also seen a growing interest in enterprise solutions, which are for the larger corporates that are exploring the core-flex model for a portion of their space needs.”

Workthere has been integrated with Savills’ traditional corporate leasing advisory business so that tenant advisers can work with enterprises on their core-flex solutions. The corporate leasing business is headed by Ashley Swan. 

“We see co-working becoming more relevant, having cemented its position in the leasing market over the past five years,”  says Savills Singapore’s Loo. Companies are also taking a more proactive approach in analysing how staff can work from home (WFH) and how to manage relationships — not just with clients, but also with other internal staff and the IT department, he adds. “A lot of firms are going through that right now. This is an exercise that will take some time before we know for sure whether the net effect is a reduction in space or an increase in space given the safe management measures that have to be put in place.”

Savills has been investing in technology: residents’ applications for the projects that the firm manages, procurement applications for those in the property and project management arena, and implementing technology in process departments such as accounting. Savills has also embarked on a project to create a “Savills data lake” for storage of big data. 

“We are working to enhance our existing agency platforms,” says Marriott. “We already have databases and search platforms, but we’re looking at enhancing them by incorporating our digital marketing suite.” 

 

Workthere designed as a search engine - EDGEPROP SINGAPORE

Workthere, designed as a search engine for co-working and serviced office space, is now part of Savills' corporate leasing advisory service 

 

For Marriott, it is not just important to be ranked among the five biggest global firms by market capitalisation or number of brokers. The key factor will be the ability to maintain a strong balance sheet and service one’s debt, notes Marriott. “We have added ‘cash flow’ to our vocabulary — not that it wasn’t always there. But with a strong balance sheet, we can come out of the pandemic downturn with a bigger market share and accelerate faster when the market returns to normal.” 

The London Stock Exchange-listed firm has announced its half-year results ended June 30. Group revenue was down 7% y-o-y to GBP791.4 million ($1.407 billion) in 1H2020. Underlying profit was down 66% y-o-y to GBP13.2 million. However, Savills recorded net cash of GBP9.4 million in 1H2020, compared to net debt of GBP139 million in 1H2019. 

With Covid-19, transactional businesses have dropped, but property and facilities management business saw revenue growth in the first six months of 2020, according to Savills in its results announcement on Aug 6. There has already been a considerable amount of consolidation in recent years, says Marriott. “The key will be the ability of the top five global firms to maintain a strong balance sheet,” he adds. “This period could well throw up some opportunities because of the extended period in which businesses need support for their cash flow.”

Reflecting on Savills’ growth in Singapore and Southeast Asia over the past 15 years where he continues to play an instrumental role, Marriott says: “We’ve stuck to a steady, stable growth plan. And we will continue to push that plan, not just in Singapore but in Southeast Asia.”

In Singapore, Marriott wants Savills to be among the top three players — “by profit and not by number of brokers”, he adds. 

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Berkeley Group to launch London development Eden Grove at sales launch event

Berkeley Group to launch London development Eden Grove at sales launch event

Eden Grove - EDGEPROP SINGAPORE

Eden Grove in Staines-Upon-Thames offers 489 units (Photo: The Berkeley Group)

 

SINGAPORE (EDGEPROP) - The Berkeley Group will be launching a 489-unit residential development Eden Grove this month, starting with the release of 130 one- to two-bedders at Lavender House in the first phase. The units for sale will range from 442 sq ft to 793 sq ft. Prices start from GBP320,000 ($574,825).

Sitting on 1.04ha of land near the river at Staines-Upon-Thames, the development will be the tallest residential building in the town with views of the Surrey countryside.

Resident facilities include a new co-working space, a concierge, cinema, private gym and a central garden. The development is estimated to complete in 2024.

Situated within a five-minute walk to the train station, the property will be 35 minutes by train to central London.

According to Andrew Hawkins, head of international residential sales and marketing at Savills, Eden Grove should attract global interest as Staines-Upon-Thames was recently ranked No1 location for start-ups, headquarters of global brands and proximity to top schools such as Royal Holloway University and Eton College.

Units will be launched in Singapore by appointment only, from Sept 11 to 13. The project is jointly marketed by JLL and Savills.

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Flexibility the norm in the office of the future: Lombardo of Lendlease

Flexibility the norm in the office of the future: Lombardo of Lendlease

CSUITES BY LENDLEASE - EDGEPROP SINGAPORE

Due to businesses’ need for flexibility, csuites has seen a hike in enquiries from firms as they rethink their office footprint (Credit: Samuel Isaac Chua/ The Edge Singapore) 

SINGAPORE (EDGEPROP) - The norms of working from an office have been disrupted by the Covid-19 pandemic, with some businesses scaling down their office footprint, halting physical operations and embracing work from home instead. 

Against such a backdrop, the needs of office tenants have changed. One such trend is the decentralisation of offices, says Tony Lombardo, CEO of Lendlease Asia, who foresees more companies adopting multi-location strategies. “Companies are beginning to explore hub-and-spoke solutions to accommodate both urban and suburban locations, to support employees who prefer to commute alone to a dedicated workspace as opposed to commuting via public transport to a dense urban location, such as the CBD,” he says. 

BLD PAYA LEBAR - EDGEPROP SINGAPORE

Occupying over 4ha of land, Paya Lebar Quarter comprises three Grade-A office towers that span one million sq ft, PLQ mall, and a residential component of 429 units (Credit: Samuel Isaac Chua/ The Edge Singapore) 

Clients have also started to establish back-up offices, just in case the existing office has to be closed down temporarily, he adds.

The Australian-listed developer operates its own flexible workspace brand, csuites, which takes up 72,000 sq ft in one of three Grade-A office towers in Paya Lebar Quarter. Due to the need for flexibility by businesses, csuites has seen a hike in enquiries from firms as they rethink their office footprint. In fact, Lombardo is confident that the number of such enquiries is set to “increase and remain strong”, and reveals that the team is keen to explore shorter leases for its clients, at a smaller pax requirement for its office suites offering. 

The second change that Lombardo expects is that staff will have to adopt flexible working habits. “As employers and employees alike get more comfortable with remote working, it is likely that employers will likely want and need to accommodate a higher percentage of workers with flexible or split schedules between their homes and their offices,” says Lombardo. 

PEO TONY LOMBARDO - EDGEPROP SINGAPORE

Companies are beginning to explore hub-and-spoke solutions to accommodate both urban and suburban locations: Lombardo (Credit: Albert Chua/ The Edge Singapore)

Third, space design will have to be relooked at. “Tenants and building owners will need to reevaluate communal spaces, shared amenities, and potentially crowded ‘bottlenecks’ including lobbies, elevators, bathrooms and cafes,” says Lombardo. Tech facilities that include audio and video conferencing amenities are key to ensure employees are connected to one another, he adds. 

Fourth, the future workplace needs to have a strong focus on health and wellness. “Clear communication and visibility of health and cleaning protocols will be critical to address the psychological hurdle employees will face when returning to work,” Lombardo says. 

Social distancing - EDGEPROP SINGAPORE

Social distancing at csuites (Credit: Lendlease)

Some of the measures Lendlease have adopted in csuites include ramping up the frequency of cleaning at high touchpoints, and sanitising all parcels that are delivered to its tenants. The work desks in csuites have also been spaced out, while access to the office space has been limited to members only. 

For price trends, recent transactions, other project info, check out these projects' research page: Paya Lebar Quarter 

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Servcorp rides higher demand for short-term flexible workspace in Singapore

Servcorp rides higher demand for short-term flexible workspace in Singapore

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.

 

ServCorp’s unique proposition - EDGEPROP SINGAPORE
Chavez: ServCorp’s unique proposition in the Singapore market is our range of multinational corporate infrastructure that small businesses can utilise. (Picture: ServCorp)

 

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.

 

ServCorp office -EDGEPROP SINGAPORE
ServCorp has established a modest presence in the local co-working market, operating five prime office locations in the CBD. (Picture: ServCorp)

 

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.

 

flexible workspace in Singapore - EDGEPROP SINGAPORE
ServCorp says it has benefitted from a bump in demand for flexible workspace in Singapore as a direct result of split team work arrangements and safe distancing mandates. (Picture: ServCorp)

 

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.

For price trends, recent transactions, other project info, check out these projects' research page: CapitaGreen, Six Battery Road, Marina Bay Financial Centre Tower 2, The Metropolis Tower 2,

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The Work Project rolls out people-first plan for members returning to work

The Work Project rolls out people-first plan for members returning to work

SINGAPORE (EDGEPROP) - Maintaining a safe workspace amid the ongoing Covid-19 pandemic is a priority for all workspace providers. In Singapore, co-working operators such as The Work Project have rolled out new measures that adhere to government guidelines for the workplace. The co-working operator has also been proactive in reaching out to its members in supporting their long-term business and future real estate needs.

In a statement to members on June 1 this year, Junny Lee, founder and CEO of The Work Project, noted that in the flexible workspace industry, the “knock-on effects of lockdowns all over the world and safe distancing measures have forced us to not only self-reflect, but also catalyse, unprecedented collaboration among stakeholders”. He adds that although much of the groundwork is set, “there is much more to come”.

 

PEO JUNNY LEE - EDGEPROP SINGAPORE
Lee: We have proactively engaged customers who are in need of downsizing their offices now, with the option of upsizing later once they recover. (Picture: Albert Chua/The Edge Singapore)

 

In Singapore, The Work Project manages five upmarket co-working locations in OUE Downtown, Parkview Square, Capital Tower, Asia Square, and Great World City. A new centre is expected to open in the upcoming CapitaSpring next year. The company also operates a co-working centre in Causeway Bay in Hong Kong.

According to Lee, remote working is having different impact on their offices in Singapore and Hong Kong. “In Hong Kong, 70% of our members are utilising the office each day. Singapore’s office utilisation rate has been low since circuit breaker, as most office workers are still required by the Government to work from home,” he says.

Lee says that The Work Project still plays an important role in maintaining the physical and digital infrastructure of the workplace, which in many instances is now connected to home environments. “Many of our customers continue to use their office phone lines and data servers while working from home, the infrastructure of which is housed in our centres,” he says.

On June 1, when the circuit breaker period in Singapore ended, The Work Project shared a “Return to the Workplace” guide with its members. It communicated several proactive steps it had rolled out to ensure members could safely go back to work.

The company has also trained all of its operational staff to handle various Covid-19 related scenarios, including a suspected or confirmed case, as well as how to wear and remove personal protective equipment. It also set aside necessary medical equipment and designated isolation rooms in all its locations.

 

Hassell Studio TWP Asia Square - EDGEPROP SINGAPORE
Singapore’s office utilisation rate has been low since the circuit breaker, as most office workers are still required by the government to work from home. (Picture: The Work Project)

 

Strict safe distancing measures led the company to cut down capacity in common spaces, hot desk areas, and meeting rooms. This means removing and adjusting furniture and using markings to enable proper safe distancing.

Measures to prevent community spread of Covid-19 in workplaces and common areas have also impacted the services and programming it typically offers. The Work Project has temporarily suspended its Day Pass purchase and Global Access usage, while the capacity and pricing of all meeting rooms has been reduced by 50%. Community events have also been suspended, and pantry snacks have been temporarily removed.

“The Work Project’s amenities such as meeting rooms, phone booths and focus rooms remain open, although with safe management measures in place, as some members may not have a conducive environment to work at home, such as experiencing technical difficulties during teleconferencing calls,” says Lee.

However, the bleaker economic outlook has raised concerns from some members in their ability to continue lease commitments with The Work Project.

According to Lee, “our priority is to ensure our customers are set up for long-term success. For that reason, we have proactively engaged customers who are in need of downsizing their offices now, with the option of upsizing later once they recover. Our single most important mission is to maximise the chances for our customers to be successful in the long-run”.

 

THE WORK PROJECT CAPITAL TOWER - EDGEPROP SINGAPORE
Lee says that physical interaction in the workplace is still paramount, and expects high demand for flexible plug-and-play workspaces. (Picture: Albert Chua/The Edge Singapore)

 

While some members have requested more space to accommodate split team work arrangements, the majority of members have been able to schedule work shifts between their employees within the existing space, says Lee.

In its Hong Kong office space, after the first wave of Covid-19 infections, most companies there have adapted to work under the “new normal”, says Lee, adding that 70% of the members based there are already back at work in the office and most physical meetings resumed in August.

Looking ahead, Lee says that physical interaction in the workplace is still paramount, and he expects high demand for flexible plug-and-play workspaces when the world is able to fully return to work.

“In the long run, we foresee that flexible workspace will benefit as traditional tenants will look to incorporate more flexible spaces in their portfolio to take advantage of the ease of expanding and retracting their real estate footprint,” says Lee. 

Check out the latest listings near OUE Downtown,Parkview Square and Great World City.

For price trends, recent transactions, other project info, check out these projects' research page: OUE DowntownParkview SquareCapital TowerAsia Square, and Great World City.

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Remote working emphasises importance of co-working community: JustCo

Remote working emphasises importance of co-working community: JustCo

SINGAPORE (EDGEPROP) - At its heart, well executed co-working spaces are communities for different businesses and entrepreneurs to share and interact, and spin off new business opportunities. But this sharing culture has been hindered by widespread remote working and safe distancing measures as a result of the Covid-19 pandemic.

“Covid-19 has made people realise that social interactions and the community element plays an imperative part of our work experiences,” says Brandon Chia, JustCo vice-president and head of Singapore and Indonesia. “Humans are social beings and we understand the need for physical interaction and companionship — which is different from simply interacting with one another virtually,” he says.

 

PEO BRANDON CHIA - EDGEPROP SINGAPORE
Covid-19 has made people realise that social interactions and the community element plays an important part of our work experiences, says Chia. (Picture: Samuel Isaac Chua/The Edge Singapore)

 

Co-working space operator JustCo is one of the largest flexible workspace providers in Singapore and the Asia Pacific region. The company — which is headquartered in the Republic — has rapidly expanded its local and regional presence over the last few years. In Singapore, JustCo operates 18 co-working locations with at least one more new location in the pipeline. It has also established a presence across major Asia Pacific cities — like Taipei, Shanghai, Bangkok, Seoul, Sydney, Jakarta and Melbourne — where it has over 20 co-working centres.

Following the end of the “circuit breaker” period — a stay-at-home order implemented as a preventive measure by the Singapore government in response to the pandemic — the company says that most of its members continue to telecommute or work from home. “JustCo saw about 20% of our members return to our centres to carry out essential services – this number has been quite consistent across all centres in Singapore since the easing of the circuit breaker,” says Chia. Singapore’s circuit breaker period formally ended on June 1.

Returning members are only allowed to work from their assigned “home centre” and are strongly discouraged from visiting multiple JustCo centres. Health and safety in the workplace remains a concern for this group of members and the co-working operator has been clear in communicating its stringent health and safety measures, says Chia, adding that members have been generally receptive and understanding of the rules put in place to stem the spread of the virus.

 

OCBC Centre East - EDGEPROP SINGAPORE
JustCo opened its latest centre at OCBC Centre East in August, after a three-month delay. (Picture: Samuel Isaac Chua/The Edge Singapore)

 

“We have also reconfigured our furniture in common areas and placed prominent signs at communal areas to enforce a safe distance among members and reduce close interactions. Contactless thermometers and hand sanitisers are also free for members and visitors to use. These measures have had no direct impact on the daily occupancy rate,” Chia adds.

JustCo members are concerned about their ability to continue attending events to interact with other businesses. To encourage dynamic exchanges across their community, JustCo offers virtual events in lieu of physical events where like-minded individuals and businesses can connect for potential collaboration opportunities.

“Over the years, we have seen many member-to-member success stories and how companies have found connection and synergy with one another — which is something that JustCo truly stands for, connections within the community,” says Chia.

The co-working operator is banking on its suite of services and functions on its mobile application to bridge the virtual gap. Through the app, members receive updates and alerts to attend virtual events or webinars organised by JustCo. They can also enjoy privileges when they purchase business services through the Jshop, an e-store function on the app.

 

JUSTCO OCBC CENTRE EAST - EDGEPROP SINGAPORE
Since the easing of the circuit breaker in Singapore, JustCo has seen about 20% of its members return to work at its centres. (Picture: Samuel Isaac Chua/The Edge Singapore)

 

In June this year, the company also launched a new initiative called JustCo Campus, a multi-format learning hub where its members can consult, connect, and learn through a range of events including one to one business consultations and curated panel discussions.

“Especially in a time like this, members have found it extremely helpful and convenient as they get to easily access specially curated events via a single online platform and also learn and connect with other individuals and businesses across the globe,” Chia adds.

In Singapore, the government still advises companies to adopt remote working for most employees where possible, on top of strict safe distancing measures. JustCo says it has received enquiries from businesses who needed help in setting up alternative working arrangements and split team office arrangements as part of their business continuity plans.“[This is the case] specifically for their employees who are not able to telecommute and have to be working nearby and still be in compliance to the safe distancing requirements,” says Chia.

On the other hand, he says that some JustCo members have also requested moving to smaller sized office spaces, due to the bulk of their workforce now working from home. “We have members who requested to scale down in terms of their office spaces. This is also the beauty of JustCo as it provides our members with the flexibility to upsize or right-size their office space when needed,” he notes.

The challenging market conditions are also forcing some JustCo members to take a hard look at their future corporate real estate needs, and some have indicated that they may not be able to renew their lease as a result of the current market conditions, he adds.

“However, we have also received a fair share of new enquiries from businesses that are looking to move out of their traditional office spaces and into co-working spaces. These corporates are rethinking their real estate strategy and work arrangements, and they recognise the importance of a flexible, reliable and sustainable workspace solution — one that allows them to respond to different situations in future.”

 

BLD JUSTCO UIC BUILDING 05 - EDGEPROP SINGAPORE
While some JustCo members say they will not renew their leases due to the challenging market conditions, a number of corporates are still moving into new flexible workspaces. (Picture: Samuel Isaac Chua/The Edge Singapore)

 

Changes to office space demand are also reverberating across the region as a result of the ongoing pandemic. During the early stages of the pandemic in the Asia Pacific, Chia says JustCo saw an increase in enquiries as businesses sought alternative working arrangements as part of businesses continuity plans. But this has evolved over time with work-from-home mandates set by local governments.

In recent months, as businesses transit and adapt to a new normal, “businesses increasingly demand workspaces that offer maximum flexibility that allows them to adapt to different situations with minimal disruption,” says Chia, adding that “this change in demand across all markets are quite similar since companies and employees all around the world have been affected.”

A timely response to the increase in demand for even more flexible workspace solutions, JustCo will launch a new on-demand workspace usage concept at its upcoming space in The Centrepoint. This means that consumers will only pay for their usage duration, but it still allows them to utilise co-working amenities including hot-desks, phone booths and meeting rooms.

This new space at The Centrepoint is slated to open in October. It will be its first centre to feature card-free access for centre entrances, meeting rooms and private suites. Members will be able to access these areas through the JustCo app on their smartphones.

“With more businesses looking for short-term leases and doing away with long-term contracts, this innovative concept will definitely be worthy of consideration as it requires zero commitment. Members get to maximise cost savings in the long-run, and transfer the savings to drive innovation or business development of their own,” says Chia.

 

BLD JUSTCO AT MARINA ONE - EDGEPROP SINGAPORE
JustCo will launch a new on demand workspace plan that will allow consumers to will only pay for their usage duration, and allows them to utilise co-working amenities. (Picture: Samuel Isaac Chua/The Edge Singapore)

 

JustCo will be relocating its headquarters from its current office space in Marina One East Tower to The Centrepoint to cater to the company’s growth and expansion. American video game developer and publisher Riot Games will also move some of its Singapore-based team into the new co-working space.

“JustCo’s one-stop workspace solution has provided us with great convenience and flexibility to house our growing team while we work on numerous new game launches. We moved into JustCo less than a year ago, and have since outgrown our existing space. We are excited to be moving to a larger workspace at JustCo at The Centrepoint later in the year,” says Kaialani Ng, office manager of Riot Games Southeast Asia.

Chia says JustCo still sees demand from large corporates who are adopting flexible workspace solutions as part of their business strategy. Despite the disruptions caused by the pandemic, the co-working operator says that its expansion plans this year are still on track, although it had to push back some launch timelines due to various country lockdowns and government mandated remote working over the past few months.

For example, in Singapore, the company opened a new centre at OCBC Centre East in August and is working to ready its centre at The Centrepoint. But the completion and opening dates of both properties were delayed by about three months because of disruptions, he explains.

“In a post-Covid-19 world, we believe that co-working spaces will continue to play an important role as companies are more aware than ever of the need to seek for workspaces that offer maximum flexibility,” says Chia. He expects more businesses will house more employees in flexible workspaces going forward as a result of remote working, and as part of broader workforce decentralisation strategies. 

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WeWork turnaround driven by companies seeking flexibility in uncertain times

WeWork turnaround driven by companies seeking flexibility in uncertain times

SINGAPORE (EDGEPROP) - Co-working giant WeWork’s fortunes are turning around, despite or perhaps because of Covid-19. After all, WeWork was founded in 2010 — on the back of the Global Financial Crisis, when it turned nondescript, vacant office buildings into workplaces that attracted millennial talent.  

 

Ray Tan Head of Growth WeWork Southeast Asia and Korea - EDGEPROP SINGAPORE

Tan: We are one of the biggest occupiers of Grade-A office space in the CBD and Singapore continues to be one of our key cities in the region (Photo: WeWork)

 

In 1Q2020, WeWork reported revenue of US$1.1 billion ($1.49 billion) — the first time that revenue crossed the US$1 billion mark —  and a 45% jump from a year ago. In 2Q2020, revenue was US$882 million, 9% up from the year before. Meanwhile, its lead investor Softbank has committed US$1.1 billion in new debt financing last month. 

“We have a five-year strategic plan that is starting to pay off,” says Ray Tan, head of growth for WeWork Southeast Asia and Korea. At the onset of Covid-19, WeWork still saw an 11% increase in terms of enterprise members across the region, adds Tan. “It’s a testament to how our product is still relevant to the market today, even in times of uncertainty.” 

It’s during such times that WeWork believes in working closely with international real estate brokers the likes of CBRE and JLL. “WeWork solutions don’t come with just space, but are packaged with the services that we provide,” says Tan. “On the commission front, we actually provide brokers with a higher commission compared to traditional leases.” 

 

WeWork 8 Cross Street Common Area - EDGEPROP SINGAPORE

The WeWork at 8 Cross Street (Photo: WeWork)

 

Given that real estate brokers are an integral part of the business — not just in helping WeWork to secure a space in a building, but also in proposing WeWork as a solution to their clients — Tan believes transparency is key. “Whether in good times or challenging times, we’re always focused on sharing information with the brokers as much as possible, so that they can communicate to their clients,” he adds. 

Brokers reciprocate by sharing with WeWork the challenges or “friction points” posed by their clients and engaging the co-working operator in finding a solution. “Some of the typical challenges that we hear from our brokers is on flexibility — the need to downsize or upsize; or addressing some of the space requirements like underutilisation or overcrowding,” adds Tan. 

 

More companies are interested in flexible office space as they seek shorter-term commitments as a way to rationalise their operations, said Colliers in a report on Aug 25. That’s where co-working players like WeWork play a key role in that scenario. One of WeWork’s key leverage points is its extensive global portfolio: from 828 locations across 149 cities in the first quarter, to 843 locations across 150 cities at the end of the second quarter. 

 

WeWork Suntec Tower 5 Common Area - EDGEPROP SINGAPORE

The WeWork in Suntec Tower 5 at Suntec City (Photo: WeWork)

 

Enterprises, which are companies with more than 500 employees, made up 48% of WeWork’s memberships in 2Q2020, up from 45% the previous quarter. As at end 2Q2020, WeWork has 612,000 members, a 16% increase y-o-y. “It’s a lot easier for enterprises which need to expand across Southeast Asia or other parts of Asia,” says Tan. 

Firms are adopting a more diverse real estate strategy, stressing employee choice, notes Sam Harvey-Jones, Colliers International managing director of Occupier Services, Asia. “This may well involve a combination of retaining headquarters in the CBD, perhaps at a reduced footprint, coupled with suburban hubs, flexible space and remote working,” says Harvey-Jones. “The global work-from-home experience has shown that remote working is here to stay in some capacity; both employees and their managers see the benefits. However, home working will complement office work, not replace it. Physical offices will remain as an anchor and key to promotion of corporate culture and mission.” 

WeWork’s Tan agrees. “Remote working brought about by the pandemic has given the office a more defined purpose – for collaboration, community and promoting corporate culture,” he says. “Total work from home approach is not sustainable nor a realistic long-term solution, because in-person social interaction is important for innovation and building corporate culture.”

 

The WeWork at Funan - EDGEPROP SINGAPORE

The WeWork at Funan opened last year in the new mixed-use development by CapitaLand (Photo: WeWork)

 

In its Occupancy Benchmarking Survey of 3,000 employees, published in July 2020, JLL predicts that 30% of office space will be flexible by 2030. The study highlighted that while workers are keen to continue working in offices after the Covid-19 pandemic, they would also like to have more freedom over where they work, including having the option to work from home for one or two days a week. Meanwhile, two-thirds of industry leaders in global real estate are beginning to implement workplace mobility programmes, which allow staff to work in more flexible locations, said JLL. 

 

These trends lend themselves to the significance of co-working operators like WeWork in the future of office space. Flexibility is key, especially as companies explore a staggered or phased approach for their employees to return to the office, with safe management measures to be implemented. 

Covid-19 has also accentuated the importance of future-proofing one’s business operations, says Tan. By opting for flexible space solutions like WeWork, companies can reduce occupancy-related costs by up to 50%, he estimates. 

 

Anson Common Area - EDGEPROP SINGAPORE

The flexibility that WeWork provides has translated into increased confidence among its members, especially those in Singapore (Photo: WeWork) 

 

Interestingly, the flexibility that WeWork provides has translated into increased confidence among its members, especially those in Singapore, where membership commitments are two to three times longer than the average across Southeast Asia, notes Tan. For instance, there has been an increase in membership commitments for five to seven years, he adds. 

WeWork has also changed the way it operates in the Covid-era of safe distancing. In the common areas, there are wayfinding signages to help people navigate around the spaces. Notices have also been placed outside different meeting rooms, stating the capacity limit for each room and which rooms are to be kept vacant as buffer spaces, to prevent overcrowding. Hygiene and cleanliness of spaces has been stepped up, with hands-free sanitiser dispensers placed around the place, especially near high-touch areas such as door handles and doorways, staircases and lift areas. Frequency of cleaning has also been stepped up. 

There’s an increase in demand from both companies and individuals who want an alternative location — for those who choose not to work from home but remotely. “This is most prevalent in Singapore, where space is a luxury,” says Tan. 

 

Jalan Besar Common - EDGEPROP SINGAPORE

The location at 380 Jalan Besar is one of the city fringe locations that opened last year (Photo: WeWork)

 

More firms are willing to consider decentralised areas as well as the CBD. Some enterprises are looking at a “hub-and-spoke” model, where their workforce is distributed across multiple WeWork locations within the CBD, but all located within a five-minute walk, says Tan. 

While WeWork spaces are still heavily concentrated in the CBD area, it has also ventured to the city fringe to increase accessibility. In Singapore for instance, WeWork can be found at 30 Prinsep Street, Arc 380 on Jalan Besar, and at UE Square on 83 Clemenceau Avenue. 

At Raffles Place, WeWork has expanded its presence at MYP Building at 9 Battery Road from three floors to 14 floors. It is also going ahead with its plan to take up the entire 21-storey building at 21 Collyer Quay (the former HSBC Building), and several floors at the former Chevron House at 30 Raffles Place. These are scheduled to open by next year. “We have seen strong pre-opening activity,” says Tan. 

 

SG MYP Centre - EDGEPROP SINGAPORE

The WeWork at MYP Centre in Raffles Place is expanding from three to 14 levels within the tower (Photo: WeWork)

 

For instance, a company is taking up four floors at one of WeWork’s upcoming locations at Raffles Place and establishing it as the regional headquarters. Another enterprise, a travel company, has scaled down its operations in the rest of the region and is instead, consolidating its presence in Singapore, its regional headquarters, where it will be taking up an entire floor in one of the upcoming spaces at Raffles Place. 

WeWork members are a diverse mix, and besides enterprises, they include government agencies, for instance, the Ministry of Culture, Community and Youth. “We’re continuing to see more government groups that are considering WeWork as a way to scale their operations too,” says Tan. 

The opening of the two new locations at 30 Raffles Place and 21 Collyer Quay will increase the number of WeWork locations in Singapore to 14 from 12 today. This will increase WeWork’s footprint in Singapore by three times, from a year ago. “We are one of the biggest occupiers of Grade-A office space in the CBD,” says Tan. “Singapore continues to be one of our key cities in the region.” 

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JustCo Campus offers online workshops, networking events

JustCo Campus offers online workshops, networking events

EDGEPROP SINGAPORE - justco campus Learners engaged in a discussion at a collaboration area at JustCo at AIA Central, Jakarta. During the ongoing pandemic, a number of JustCo Campus activities will be conducted online.  (Photo: JustCo)

Learners engaged in a discussion at a collaboration area at JustCo at AIA Central, Jakarta. During the ongoing pandemic, a number of JustCo Campus activities will be conducted online.  (Photo: JustCo)

 

SINGAPORE (EDGEPROP) - Co-working operator JustCo has introduced JustCo Campus, a programme to facilitate business networking in today’s age of remote working. In partnership with education startup NewCampus, JustCo Campus will offer business consultations, workshops and panel discussions. Topics include building a growth mindset, leadership in times of crisis, financial wellness and preserving mental health.

“We are excited to partner NewCampus who will bring their wealth of knowledge to modern-day curriculum,” says founder and CEO of JustCo Kong Wan Sing.

There will be networking opportunities such as the Power Breakfast and Power Lunch events, where industry leaders and executives can meet and exchange ideas. Members can also attend community events such as film screenings and virtual hangouts. JustCo Campus will be implemented across eight major cities: Bangkok, Jakarta, Melbourne, Singapore, Seoul, Shanghai, Sydney and Taipei.

The membership costs $59 per person per month and corporate rates are available. The membership includes up to two virtual masterclasses per month, unlimited virtual conferences and group mentoring sessions, exclusive content and complimentary event passes.


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Flexible workspaces won’t die out in the long term: CBRE

Flexible workspaces won’t die out in the long term: CBRE

EDGEPROP SINGAPORE - The long-term fundamentals of flexible workplaces remain sound, says CBRE (Credit: Albert Chua/ The Edge Singapore)

The long-term fundamentals of flexible workplaces remain sound, says CBRE (Credit: Albert Chua/ The Edge Singapore)

SINGAPORE (EDGEPROP) - As Covid-19 wreaked havoc worldwide and employees retreated to their homes to work, offices around the globe have, at one point or another, been largely empty. Undeniably, the flexible workplace sector has weathered a heavy hit, with occupancy levels at co-working spaces and serviced offices at an all-time low, and membership growth seeing a slowdown. 

But despite the short-term gloom, CBRE believes that the long-term fundamentals of flexible workplaces remain sound, citing four reasons. 

First, flexible workspaces will become widespread post-pandemic. Inevitably, Covid-19 “will create a more fluid workforce and lead to greater acceptance of more varied working styles and locations”, CBRE highlighted in a June report. How this is likely to play out is through the adoption of a hub-and-spoke model, says CBRE, where companies maintain a core office front in the CBD and fit out several smaller offices in further-out locations. Tenants could also adopt a “core+flex” solution, where businesses keep a core office space on a fixed, long-term lease, while satellite offices are maintained on flexible leases. Already, the two trends have been gaining traction among office occupiers, notes the real estate consultancy. 

The flexible workspace industry will also be able to cater to firms’ headcount volatility, growth testing, and access to readily available space on short notice, it adds. 

Second, such co-working spaces or serviced offices could be alternative offices that serve under a firm’s Business Continuity Plan. CBRE notes that it has, in fact, tracked a rise in the number of enquiries from larger occupiers who have sought alternative workspaces in China, Hong Kong and Singapore. This includes touchdown locations and locations having virtual office services such as phone-answering and communications. 

Third, flexible workspaces could help office tenants evade high upfront fit-out costs as these offices are typically fully-fitted. Businesses could then utilise their capital for operational expenses instead. To this end, CBRE has observed that there have already been several recent deals involving large firms committing to long-term agreements in co-working centres in Singapore, Shanghai and Hong Kong, and it expects this trend to continue. 

Fourth, flexible workspaces could emerge as one of the solutions for large occupiers seeking to accommodate social distancing protocols, which could help spread out workers in Asia Pacific’s dense office environments.

EDGEPROP SINGAPORE - Penetration of flexible workspace industry by market (Source: CBRE Research)

Penetration of flexible workspace industry by market (Source: CBRE Research)

 

As of late May, occupancies in several major co-working centres in China and Hong Kong have “recovered considerably”, a trend CBRE expects will be replicated in other markets as restrictions are gradually lifted. 

But there will be short-term pain. “Owing to social distancing guidelines and the slow acquisition of new members, co-working centres have been unable to operate at full capacity over the past few months, negatively impacting occupancy,” says CBRE. “Several operators have also put expansion plans on hold and have furloughed or laid off staff to alleviate the rising financial pressures.”

The boom in flexible workspaces was largely driven by demand from start-ups and smaller-scale occupiers. However, in a market downturn, demand from such players are more volatile. The pandemic has already caused smaller companies to relocate to cheaper or home-based locations, or forced them out of business entirely, says CBRE. 

On the other hand, larger occupiers are also evaluating more cost-effective options due to budget cuts in office relocations and fit-out, further weakening demand. 

As it is, the flexible workspace industry already faces a high competition for tenants as there is ample supply in the market. As at end March, the total inventory of flexible space in 18 major cities in Asia Pacific tracked by CBRE reached 71 million sq ft. Although the rate of growth has slowed to 5% in 1Q2020 from 20% y-o-y in 2019, supply has in fact risen threefold over the past five years.

CBRE, therefore, expects more M&A activity as well as further consolidation to happen among operators. “Closures of unprofitable centres will be unavoidable but surrendered or subleased space is likely to be taken up by other co-working operators that are financially sound, or by tenants seeking fully fitted-out space,” it says. 

Consolidation will, however, vary market to market, with contraction to happen in cities where flexible space has been a key driver of office leasing demands, and where flexible workspaces are in an oversupply. One such example is Shanghai, where the industry has accounted for 15 to 20% of leasing demand over the past three years, points out the real estate consultancy. Shenzhen is also susceptible due to a supply peak, it adds.

Read more: Singapore's office market outperforms Hong Kong's as the rival Asian hubs battle coronavirus outbreak

 

Total size of flexible workspace market in Asia Pacific (Source: CBRE Research)

 

With a few exceptions, most flexible space operators have kept their centres open throughout the pandemic, notes CBRE, unless entire buildings have been forced to close or countrywide lockdowns have been implemented. 

To comply with safety precautions while keeping business running, most operators have limited guest access; reconfigured shared spaces and meeting rooms with staggered seating and buffer zones; and ramped up cleaning standards with more frequent cleaning and providing free masks to members.

Following the onset of Covid-19 in February, CBRE notes that individuals, start-ups and SMEs were quick to request relief measures from flexible space operators. In response, most operators have prioritised renewals with existing customers, while others have offered membership fee reductions. Alternatives rolled out also include fee waivers for certain periods in exchange for contract extensions, and deferment of fee payments. 

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In April, Singapore-based co-working operator JustCo offered 3,000 of its members across eight cities across the region a reduction of up to 30% on one month’s membership fees. 

Meanwhile, flexible workspace players have turned to landlords for help to survive. Many flexible workspace operators have started to approach landlords to renegotiate and restructure leases, and request for rent abatement and fit-out subsidies, says CBRE. Many of these leases were signed at the market peak of 2018 to 2019. “Some operators are also understood to be pushing for a transition to revenue-sharing models or are entering into management agreements.” 

Moving forward, flexible-space operators will focus on catering to larger companies, as big companies are less exposed to cash flow risks, says the consultancy.  

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