Collaboration is king in today’s workplace, with the popularity of co-working spaces enoying tremendous growth in recent years, new research shows.
CBRE’s latest Viewpoint - The Rise of Co-working Space in Asia Pacific: Boon or Bane? – highlights the rise of co-working space globally, surging from just 75 spaces in 2007 to more than 7,800 in 2015.
In Asia Pacific, most co-working spaces are located in gateway cities including Hong Kong, Singapore, Shanghai, Tokyo, Sydney and Melbourne. CBRE Research estimates there are a total of 300 co-working spaces in these locations.
While Asia Pacific lags behind the West, including New York and London, which each have at least 120 co-working spaces, the phenonomen is gaing momentum across the region.
Sydney and Melbourne are home to around 60 co-working spaces, with major operators including Hub Australia, Jelly Coworking Meetup and WOTSO Workspace. By contrast, Tokyo is home to roughly 100, while Hong Kong, Singapore and Shanghai host 40-60 each.
Local and regional co-working space operators still dominate in Asia Pacific, accounting for a 60% market share. However, several international players are expanding aggressively.
CBRE Director, Workplace Strategy, Matt Strudwick said technology had liberated organisations from the traditional view of the office being the place to work.
“Organisations are using a mix of spaces to provide an attractive proposition to their employees, service their clients more effectively and drive out some of the fixed costs of traditional office space,” Mr Strudwick explained.
“Employees have been empowered to work from client locations and from home in the past, but co-working spaces offer something more. Co-working spaces are conducive to fostering and enhancing an entrepreneurial culture and a sense of team.”
Mr Strudwick went on to say, beyond exposure to this way of working, organisations were actively looking inside co-working spaces to source their next round of talent.
“This has seen some organisations add proximity to co-working spaces to their list of requirements when searching for their own space,” Mr Strudwick said.
“While the co-working office offers an attractive work space for start-ups and small businesses, it is not just these companies that we are seeing demand from.
There is a growing trend whereby big corporates are leasing desk space in co-working hubs, so as to expose their employees to new ideas and innovative working environments.”
Dr Henry Chin, Head of Research, CBRE Asia Pacific, said competition among co-working space operators was intensifying as they open more centres, lease larger spaces and increase their presence in prime areas.
“This will increase real estate occupancy costs and squeeze profit margins. Co-working space operators need to plan expansion carefully, keep costs in check and be aware of this increasing competition—as well as conducting thorough assessments of supply and demand dynamics,” Mr Chin said.
“Operating a co-working space is not the same as straightforward office leasing or providing a space for people to work—the key to running a successful co-working space is creating an experience; building a community; and facilitating business and learning opportunities for end-users.
“While the rise of co-working space in Asia Pacific is by no means a disruptive threat to the traditional office format or leasing model, it does have a number of implications for occupiers and landlords alike, for example pointing to the need for a new approach towards office design to facilitate better collaboration and interaction between people. Landlords may want to consider whether to lease space to co-working operators or develop their own co-working platform following a detailed evaluation of the costs and benefits.”
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.