SINGAPORE: As the COVID-19 pandemic wears on, co-working spaces in Singapore are seeing signs of recovery – fuelled by companies seeking flexible contracts and people hoping to escape working from home.
While business was hit hard during the country’s “circuit breaker”, operators said occupancy rates have since gradually gone up, easing initial concerns that the pandemic would kill off the industry.
These co-working centres revolve around shared amenities, with offerings ranging from hot-desking places for individuals to dedicated studios for firms.
“Our hot-desking membership was at very healthy levels, but when COVID-19 hit, at the lowest point, it dropped to maybe 30 per cent of that. But now it’s slowly warming up to about 70 per cent,” said JustCo's vice president and head of Singapore and Indonesia Brandon Chia.
The co-working player has 19 outlets across Singapore, accommodating both individuals and enterprises.
Corporate clients, which were large drivers of demand for flexible workspaces before COVID-19 struck, have also been returning to the market.
“We lost some occupancy during circuit breaker but actually we're starting to see some silver lining,” said Mr Junny Lee, the founder and CEO of The Work Project, which has six branches in Singapore.
“Companies downsized significantly back then, but entering into Phase 2, those existing customers started expanding modestly again,” said Mr Lee, whose firm largely caters to enterprises.
Utilisation rates – or how many members are physically present in the space – have also increased to about 30 to 40 per cent for both operators, compared to the minimal activity during the circuit breaker period.
Interested parties are also getting in touch.
The Great Room, which has five branches in Singapore, said there has been a “notable increase" in enquiries from companies from the third quarter of this year, while questions about hot-desking plans have increased 20 per cent on-year, according to the company’s chief operating officer Su Anne Mi.
For JustCo, Mr Chia said the company is now getting about 85 per cent the number of enquiries it received before the pandemic hit.
Enquiries for The Work Project have risen to similar levels. However, Mr Lee is wary about using these figures to gauge positive business sentiment, saying that enquiries often come from clients in larger spaces who are looking to downsize – perhaps suggesting “contractionary activity”.
WHY THE DEMAND?
Co-working spaces offer shorter leases compared to traditional office spaces, which typically lock in contracts for at least two to three years.
This flexibility has become an even bigger lure for companies, faced with economic uncertainty amid the drawn-out pandemic.
That means that while the overall office market has been slower, the co-working space has seen an increase in demand for certain products, according to Mr Rick Thomas, executive director and head of occupier services at Colliers International.
“Previously, it was very common for firms to take up a year or so … During COVID-19, people are more cautious and looking for shorter periods like six months or three months,” said JustCo’s Mr Chia.
The spaces can also accommodate companies looking to house segregated work teams as part of a “flex-and-core” model, where part of the labour force works in such spaces, while the firm retains a traditional core office space. That bodes well for business continuity plans, Mr Chia said.
Operators also believe that people are coming back to co-working spaces because working from home may not be sustainable in the long run.
“Through the pandemic, many companies have learned that working from home is only effective for a finite amount of time,” said Ms Mi.
“Some may enjoy work from home, but for the majority, they find a conducive office environment allows for greater focus and productivity, team collaboration, and human connection.”
Still, some companies remain cautious in renting co-working spaces.
The Work Project’s Mr Lee told CNA that clients are opting for smaller spaces, when they used to take office sizes that matched their headcount or more.
However, he noted that clients also often opt for a clause that allows them to add space if needed.
To better cater to firms’ needs, The Great Room has come up with “hybrid memberships” that allow members to use both dedicated office spaces in it, as well as hot-desking memberships.
With the world still in the thick of the pandemic, operators have also had to put in strict health and safety protocols to assure their members.
At JustCo’s newest office in The Centrepoint, for instance, touchpoints have been reduced using facial recognition entry systems and card-free access.
It also uses software for spatial analytics that give members real-time updates on crowd levels at various centres.
Staff members will also get notifications on any areas that have become over-crowded, allowing them to promptly disperse crowds, Mr Chia said.
PROVIDING EVEN MORE FLEXIBILITY
Co-working spaces optimise costs by adjusting to headcount. With the need to tighten belts amid the economic downturn, one platform, Switch, is offering a more flexible option: Workspaces by the minute.
“If you consume 65 minutes, you pay for exactly 65 minutes. You don’t pay for a second hour, you don’t pay for a whole day or a whole month,” said Dominic Penaloza, the CEO of REinvent, a proptech firm that came up with the on-demand platform.
Mr Penaloza added: “It's important to our enterprise customers because when you multiply (the savings) by 1,000 employees, it makes a gigantic difference.”
“It’s a flight to flexibility," he said. "And everyone is hyper concerned about financial conditions and large dollar amount commitments.”
Switch users can book spaces by the minute in its standalone booths, which are placed in "high traffic locations" across Singapore such as at suburban malls.
They can also book seats at certain co-working centres, including some by JustCo and The Executive Centre. Together, the platform has about 2,500 "seats" in its inventory.
Since launching in end-October, Switch has picked up more than 10,000 members.
Mr Penaloza added that the concept of space on demand would be the next step on the “responsive real estate” spectrum after flexible workspace.
Operators said they are fairly optimistic about the sector’s outlook, barring any deterioration in the public health situation.
“There doesn’t seem to be a long-term mass migration to work from home … And people demanding flexibility for future-proofing or for unpredictability – those trends come in our favour,” said The Work Project’s Mr Lee.
Mr Chia agreed, saying that JustCo is also exploring “four or five” potential sites for new outlets, confident of the sector’s eventual pick-up.
Net lettable space leased to co-working operators grew only about 3 per cent this year – a significant slowdown from 16 per cent in 2019, according to Colliers International.
However, its head of research Tricia Song believes that flexible workspaces are here to stay.
“We forecast supply to similarly grow 3 per cent in 2021… (which will) be a year of recuperation for demand to catch up with the supply, and we could see more significant growth in supply in 2022,” she said.
Mr Lee added: “The real milestone will be when there are zero restrictions on people coming to work. I believe that when that happens there will be very strong demand.”