People have always worked together to achieve greater outcomes. But co-working spaces like theDesk are a relatively recent evolution.
So what does co-working really mean for you? What is the difference between a co-working space and a business centre? We set out to discover the past, present and future of the co-working industry. Is this a bubble or a real business? Let’s explore.
The changing world of work
The commercial office sector has changed rapidly in Hong Kong. High rents in popular business districts are one reason. Another is that entrepreneurs and businesses need greater flexibility and affordability, access to professional services and a supportive, inclusive community to reach their potential in the market.
Increasingly, people are turning to co-working spaces to start up and grow their business. The latest data from startmeup.hk shows that the increased availability of shared workspaces is fuelling the city’s growth as a global startup hub.
Although co-working is currently getting full attention, it’s not a recent phenomenon. In fact, the term was first used back in Berlin in 1995 when a group created a ‘hackerspace’; a place for computer hackers to meet and work together.
The trend quickly spread. Most people recognise the first official co-working space as opening in San Francisco in 2005. Brad Neuberg’s Hat Factory was born out of the need for modern, connected workers to find a place where they could avoid the isolation of working at home while still having the benefits of a ‘traditional’ office.
Ping pong tables, BBQs, banging music and free flow beer on tap. This is all beautiful and fantastic unless you need to get work done.
Co-working companies across the region are innovating at hyper speed. Trendy lounge areas, communal areas and cafes, even gyms and child-care facilities are increasingly common. But is this a sustainable business model? And how did we get here in the first place?
A big business
In 2010, two founders opened their first co-working space in New York’s Soho district. Today this company, WeWork, is now well-established internationally. What’s more, WeWork has a market valuation of US$20b. That is more than the value of Elon Musk’s SpaceX programme.
By contrast, Regus, the largest business centre in the world, has been around for 30 years and has a ‘meagre’ market cap of US$2.6b. According to investors, the critical difference between Regus and WeWork is that WeWork is focusing on community. It seems that connecting people in a collaborative space is what makes WeWork valuable.
In Hong Kong, property owners have jumped on the co-working bandwagon. Currently, the city has more than 60 shared workspaces and more open all the time. With the seemingly insatiable appetite for flexible workspaces, let’s explore a few of the myths.
Myth 1: Flexible workspace is for millennials
Fact: Over 60% of users are between 30 to 50 years old
You may have the impression that flexible workspaces are filled with young graduates and hipsters. Maybe that’s because the average age of company founders in Hong Kong is 30.4 years. But, the majority of flexible space staff and workers are well above 30 years.
Myth 2: Flexible workspace is expensive
Fact: It is 25% cheaper than a traditional office.
Many of you will think that flexible space looks more expensive than traditional office rentals. But if you add up all the costs, having your own office can be up to 25% more expensive compared to a private office at theDesk.
If you have looked into the costs, you will know that copiers, a fridge, projectors, coffee machines and IT can create one mighty bill.
Add to that interior design, management fee, utility bills, maintenance, operational costs and of course beer; it’s easy to see that a traditional office is not an option that many startups and businesses can afford.
No wonder the ‘ready-to-move-in-and-out’, flexible leasing solutions and great locations that companies like theDesk offer are fast becoming the norm.
Successful businesses want to get their work done. Their end goal isn’t to socialise and to have as much fun as possible.
Myth 3: Flexible workspace is for early-stage startups
Fact: Many multi-national companies (MNCs) use collaborative spaces.
It’s true that the early adopters of the co-working movement were new startups in technology and professional services. But that is no longer the case.
Hong Kong is home to an estimated 320,790 small-and medium-sized enterprises, employing 1.28 million people. That’s around a third of the Hong Kong’s total workforce. In other words, about two-thirds work in large-sized companies and multinationals.
It’s a sad fact that a significant portion of startups will fail. The Guangdong Human Resources says just 1% of startups by university graduates succeed. With the high failure rate, focusing only on early startups would be suicidal. The real market potential for co-working spaces is with SMEs and MNCs.
Did you know that companies like Spotify, Salesforce, IBM, HSBC, Uber, PwC, KPMG, Microsoft and others all use flexible workspaces? They do this to attract better talent and allow their project teams to collaborate in new and creative ways. It is clear from the data that co-working spaces provide the flexibility and facilities these companies need to foster innovation.
What is the difference between a business centre and co-working?
Most of us are familiar with traditional business centres like Compass, Regus and the Executive Centre. These companies offer flexible workspace and additional business services. More and more you see firms selling themselves as spaces for collaboration. But in reality, what makes co-working different?
The key differentiator of companies like theDesk is community building. Co-working is about bringing people together. It’s about connecting professionals with one another to create more business opportunities.
Inclusion, diversity and collaboration between members are what makes theDesk different.
Sure, it’s about flexible space and pricing. But the bottom line is supporting and promoting people to grow and succeed in their enterprise.
Is there a future for co-working?
Take a look online, and you’ll see that the majority of co-working spaces are selling the ‘cool’ factor in persuading new tenants.
The options can be wild: ping pong tables, BBQs, banging music and free flow beer on tap. This is all beautiful and fantastic unless you need to get work done.
theDesk’s research suggests that established businesses look for a different environment. For these members, an open-plan layout and too many community activities are disrupting.
Successful businesses want privacy to get work done and a quiet space to focus. They need flexible workspaces to mitigate potential volatility in the market. And flexible leasing to support their business growth.
The end goal isn’t to socialise and to have as much fun as possible. Instead, these members want a workspace that adds value to their productivity.
Is community building the solution?
Creating communities is not something new. It’s intrinsically human. Lululemon, Apple and Pure have all successfully built loyal communities.
Once established, the real challenge for co-working spaces is how to facilitate an environment which brings people together to share and interact.
The solution is a complex challenge, built on shifting sand. To create a place where people collaborate requires an understanding of both online and offline (O2O) behaviours: from innovation in technology to customer service, design, media, operations, and finance.
Colliers’ 2017 research report suggests that in Hong Kong 2.8% of the total of office space is flexible workspace. By 2030, the total market share of flexible space is expected to reach 30% across the APAC region.
We’re looking at a market potential of more than 27% over the next decade. Bubble or business?