According to a report on flexible workspaces published by real estate firm Colliers International, markets like Singapore, Hong Kong and Australia are set to lead the growth of the flexible workspace. In Hong Kong alone, there have been 900,000 sq ft of new flexible workspace transactions in 2018, while in Singapore, the flexible workspace sector has tripled.
These numbers – while promising – prompt the question: Is this growth a bubble, and can it be sustained? What happens in a volatile economy? Is the collaboration culture here to stay, or is it a fad that will come and go?
Christopher Clausen, Director at JLL of Asia Pacific Research and Consultancy chats with us on trends in the workplace and co-share culture.
We’ve seen a rapid growth of the co-working industry over the past decade globally – especially in Asian cities like Hong Kong. What do you think are the primary factors driving this change?
This is not something unique to Hong Kong, and something that has been [happening at large]. But there has been a paradigm shift resulting in the rise of co-working and flexible space. The changing sentiment around private and closed offices has defined the sectors. Offices have become a lot more flexible – there’s this notion of agile, mobile places – and there are changes in the demographic. Millennials like to work in more flexible spaces, and more people working and moving in cities is another driver. It makes more sense for smaller companies [to use co-working spaces], as they are more cost effective than traditional spaces.
What are the differences in the office rental environment in Hong Kong compared to other major cities in the region, say Shanghai?
Hong Kong is more innovative in using flexible spaces. Companies are setting up or taking licensing agreements enabling them to call on clients closer to their places of work. They’re also quick to see how other companies are using flexible spaces and adopting that practice as well.
What impact does the current situation in Hong Kong have on the office rental environment and co-working spaces?
Right now there is a lot of uncertainty in Hong Kong, which is also true of the economy. In terms of risk – there’s less risk using co-working spaces – there’s less capital you have to offer up front, and co-working spaces are [often] smaller and require short term commitment.
What are larger trends shaping the evolution of office spaces? (i.e. new amenities, community-focused design, etc..)
Flexible spaces are having a big impact on office designs. For example, [incorporating] designs where a work space isn’t where one [individual] occupies one seat. They are using more modern designs factoring in activity-based working. Different types of space – like breakout areas, where people can host team meetings – and communal places like cafés are being factored in.
What impact do you think this has on employees?
One of the things we hear from our clients is that their employees like the social impacts of flexible space, for example, things like happy hours. Flexible space can be used in a way that helps improve work life balance. It enables your employees to shorten their commute for a couple days a week. That has an impact on user experience and morale. Some downsides to consider are specifications – these spaces are often more dense – more workspaces are packed into a smaller area.
What factors would discourage a company from moving into a co-working space?
Intellectual property: This challenge that have [been in the making] in some time now, especially if you’re working in an open environment. When you have partitions, you have separations that separate you from someone walking down the hall. With shared spaces, you also need to think about how secure the network is. Many operators [navigate] this by offering custom solutions to users.
Brand control: This is a challenge in a [diverse space]. How do you control branding, from the layout to the color scheme?
Potential impact on employee productivity: Your employees might not be used to working in a shared area.
Recently, more landlords have joined the flexible workspace industry by either launching their own offerings or forming strategic partnerships with operators. What do you think are the main factors driving this?
Historically, landlords treated flexible workspaces as a traditional client. Increasingly landlords are looking at flexible spaces as an amenity. They are more willing to partner with operators.
How do you see the co-working industry growing or evolving in the new future?
There is room for further growth. What we’re seeing is a structural shift in the market, and it’s difficult to see where we are going for now. But there is room for growth in the Asia Pacific market. Flexible-based markets were small a few years ago, but we have seen high levels of growth.
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