SINGAPORE: Property developers are leasing more space to co-working space operators, even as demand rises from businesses in the new economy looking for flexible work areas.
Currently, there are 53 co-working space locations in Singapore, almost one-third of which are in the Central Business District (CBD) – up from about one-fifth of the overall 40 co-working offices a year ago, according to real estate company Cushman and Wakefield.
This number is set to grow, with relative newcomers Spacemob jostling into the space with more established property players such as Frasers Centrepoint.
Industry watchers cited a growing interest among landlords to lease to co-working space operators, despite initial concerns that new players will not stay through their full tenure, which is aiding this growth.
Cushman and Wakefield's Singapore research director Christine Li said “there is not a lot of track record” among these operators, and “the last thing landlords want is to get a tenant in, and after a few months, pre-terminate the lease”.
“Particularly when times were good and there was no shortage of tenants knocking on their doors, they did not have to go out to attract these co-working operators,” she said.
CHANGING VIEW ON CO-WORKING SPACES
However, as the property market has “softened”, she has seen a healthy take-up of such co-working spaces around the CBD.
In 2016 and 2017, Ms Li estimated that an average of 2 million sq ft of office space is expected to be completed each year in the CBD, double the annual average of 1 million sq ft over the past 10 years. And having such operators will help soak up the market supply, she added.
Industry watchers also note the new concept can help to optimise yield, while providing startups and freelancers access to prime locations and regional networks.
Frasers Centrepoint’s Singapore commercial head Low Chee Wah said that having a co-working space can give tenants more flexibility, particularly amid the changing nature of work.
“As work becomes more complex, the need to have discussions, brainstorm, and the need to work together increases,” Mr Low explained. “Because of that, a lot of companies are building more flexible work spaces – for example, break out areas within their office space.”
Having a serviced office provider or co-working space within the building, he added, provides tenants who are working with startups the space to “encourage their partners to occupy that area and work closer together on projects”.
TAPPING ON GROWING DEMAND
One operator that is hoping to tap on this demand is Spacemob, which recently signed a partnership with property developer Ascendas-Singbridge to open a new 14,000 sq ft office.
Located at Ascent in Singapore Science Park 1, the space is said to provide more than 100 companies with close proximity to key research and tertiary institutions, research and development, high-tech innovation and startup communities for as little as S$350 a month.
The new co-working space will open by end-March, adding on to Spacemob’s first office at Claymore Hill in Orchard.
Spacemob founder and CEO Turochas Fuad estimates that startups can save up to 40 per cent per employee by working out of a co-working office, “instead of spending their funding money on capital expenditure of building their own space”.
The Skype alum said he aims to set up 30 offices across Asia, with new co-working spaces slated to open in Jakarta, Thailand, Vietnam and Japan this year.
“It’s a platform that allows SMEs, MNCs, and freelancers to discover one another,” Mr Fuad said.
Frasers Centrepoint, too, has signed its first lease for its upcoming office building, Frasers Tower, with serviced office provider The Executive Centre. The new tenant will occupy approximately 20,000 sq ft at the Cecil Street building, which is expected to be completed in 2018.
The Executive Centre provides infrastructure to run a business including workstations, meeting rooms, and IT and telecommunications systems, but also allows for collaboration through shared and social workplaces, broad networks and interactive events.
The company’s regional director for Australia, Indonesia and Singapore Yvonne Lim said they chose Frasers Tower as the building will provide four common areas where executives can work from, and Wi-Fi will also be available throughout the building.
“The space is clearly designed with the users in mind and we see the potential of customising our space to meet our clients’ demand for exclusive corporate and recreational spaces,” said Ms Lim.
Homegrown space provider JustGroup had earlier shared that it was planning to open two shared offices with a combined floor area of more than 100,000 sq ft in the CBD come April, while property developer CapitaLand is also looking to provide more co-working spaces in its real estate portfolio.