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A closer look at new office space concepts and what they have to offer the market.
By Nikki De Guzman
High occupancy and operational costs, long lease terms and a volatile office market are just some of the major challenges faced by office space seekers looking for a location to set up and run their businesses in Singapore. When rents of traditional office spaces started to rise, businesses, regardless of scale, had to rethink their leasing strategies and consider other options that would provide them flexibilities.
Furthermore, if even big companies are feeling the pinch of rising real estate costs in setting up and operating their businesses in the city-state, the burden faced by solopreneurs, entrepreneurs and start-up companies are likely to be far weightier.
Thankfully, new business concepts for office spaces have emerged in recent times – allowing individual entrepreneurs and large corporate companies alike to use the same spaces more flexibly, not only in the leasing of the space but also in the use of it.
These flexible spaces — like serviced offices and co-working spaces — introduced new concepts for office space leasing that bridge the gap between what traditional office landlords offer and what businesses today want and need.
In this first of a two-part feature, we look into serviced offices, a leasing business concept that offers traditional office spaces at a fraction of both cost and commitment.
Serviced Office
A leasing model introduced in the 1980s to help support small business operators, serviced offices or business centres are alternatives to traditional office spaces. Operators of such businesses provide a range of professional workspaces to a variety of users — from individual players to large-scale corporations — all under one roof.
Serviced offices typically offer private offices, cubicles and meeting rooms that are usually unbranded, as well as equipment and administrative support. A standard level of service, facilities and pricing is applied throughout, with competitive rental payment and very flexible lease terms differentiating them from more traditional office leasing operators. These features enables customers to move in and set up with minimal effort and manageable costs.
One of the biggest companies operating in this segment, Regus, highlights these features as a business advantage of serviced offices.
“A clear advantage of leasing a serviced office is in reducing the costs involved,” said Paul MacAndrew, Country Manager of Regus Singapore. “Compared to traditional office space which requires fit-outs by the incoming tenant, serviced offices generally provide all essential facilities and services needed for businesses.”
The all-inclusive office combines rents and other operational costs into a convenient, periodical payment that allows companies to reduce spending in what usually accounts for the second largest cost of doing business.
All-in-one
Apart from private offices, business centres typically offer a variety of workspaces — boardrooms, meeting rooms, breakout spaces, and a lounge — to cater to a broad range of users. However, not all operators provide all of these spaces in one centre.
MacAndrew added that aside from being in an excellent location, what makes a Regus business centre a strong choice for serviced offices, are the products and services they offer. The service provider, which runs 30 business centres in Singapore and 3,000 worldwide, also offers meeting rooms, individual works stations in open-plan collaboration spaces, and well-equipped business lounges in all of their office locations.
However, more than just the spaces and infrastructure that companies require, these operators also provide other services that businesses would find useful. These include virtual offices where users can get a professional business address and a local telephone number that enable them to have an immediate business presence.
Global serviced office operator Servcorp offers this in most of their locations in Singapore. Servcorp also offers its customers dedicated receptionists to manage their calls, as well as mail and courier services.
Regus said virtual offices are being “used by all types and sizes of businesses, especially those looking to enter new markets in a low-cost, low-risk way.” JustOffice, which operates business centres in five locations in Singapore, also provides a virtual office solution in three of their sites.
Most of these virtual office service providers offer a range of packages on monthly terms that start off with one or two basic functions, and can be upgraded to the full suite of services. Prices may vary by location (Refer to Figure 1), and the amount of time the company requires the space.
With many Internet and mobile startups choosing serviced offices for the lower costs, reliable connectivity becomes an important consideration. As work and workers become more mobile, access to quality high-speed internet is one of the top factors in choosing a business centre.
To address this, Servcorp invested US$80 million in building a global network IT infrastructure to ensure that their clients can benefit from high-speed Internet connection “with 99.9 percent uptime, unified communications and disaster recovery support.”
Regus, on the other hand, offers their Regus IT service, where their users get access to 18 million WiFi hotspots around the world via a free mobile app.
Growing demand, growing competition
The flexible office market has been increasing at an unprecedented and unexpected rate. In a report by Cushman & Wakefield earlier this year, these flexible offices now account for up to eight percent of global office uptake. In Singapore, serviced offices have increasingly become one of the top alternatives for businesses that are unable to commit to long lease terms for traditional offices.
Business centres, which are operated on a rolling renewal basis for a certain minimum number of months, allows its users get a better grip on their rental expenditures. With serviced offices, companies can avoid long and costly leases and still have access to services on more flexible terms. This allows them to scale up when necessary, and dial down the services they need in fallow times.
As more consumers become aware of this concept, operators and business centres also increased in number. Locally, real estate management firm LHN Group launched their serviced office arm, GreenHub, which offers ready-to-work, fitted and energy efficient offices, back in 2012. They have since expanded to other countries in Southeast Asia on the back of increasing demand.
However, instead of seeing the growing number of competition as potential threats, operators CommercialGuru spoke to see this as a validation of the business concept here.
Trinh Danh, Servcorp General Manager for Southeast Asia, said: “We see a good demand for serviced office(s). There is a surge in the number of firms that started up in Singapore and then succeed(ed) to expand into the neighbouring Southeast Asian market.
A typical meeting room layout at Servcorp’s business centres. (Source: Servcorp)
Future perfect
According to DTZ, “the world of work is changing and flexibility is no longer sought by the tech, creative and media sectors alone, but by a growing pool of large corporate tenants coming into [specific] markets for the first time.”
Given this, serviced office operators remain bullish in their business in the years to come.
“We have seen a growing demand, and in turn, a proliferation of serviced offices in Singapore. Companies in Singapore are now more aware than ever of the impact that rapid changes in world economic outlook can have on their volume of business,” said MacAndrew, adding that businesses globally agree that flexible working is more cost effective than fixed office working. Therefore, serviced offices have become a growing sector to consider in the office market.
“The Singapore government has also been encouraging a culture of working with citizens and companies in creating professional workspaces within their community so that people can make use of these spaces to increase their productivity and work-life balance. We know that more and more people need to work on the move, and making use of serviced offices is one way of helping people maximise their productivity,” he added.
While completely replacing traditional office spaces is as yet impossible, one thing is certain: as business requirements transform and the services required change, flexible office providers can expect an increasingly diverse and dynamic tenant mix, and the serviced office market is surely one to watch.
Regus Business Center at AXA Tower
Level 34, 8 Shenton Way
Operator: Regus
Office Sizes: From 100 sq ft to 5,000 sq ft – Customisable to the client’s needs.
Nearest MRT: Tanjong Pagar and Downtown MRT Stations
Nearby amenities: China Square Central and Icon Village
At the 34th floor of AXA Tower is one of Regus’s Business Centres, with workspaces available on flexible lease terms ranging from one day to one year or more.
Featuring 43 offices and 168 workstations, this business centre also offers meeting rooms, virtual offices and co-working hot desks.
The business centre is accessible 24-hours a day, has CCTV monitoring, and is equipped with the RegusNet high-speed internet access.
AXA Tower — which offers dining options and retail outlets at its basement and ground floor storeys — is also located within proximity to a wide range of amenities, including grocery and retail shopping, as well as banks at the nearby China Square Central and Icon.
The location is also easily accessible via major expressways such as the East Coast Park Expressway (ECP) and Ayer Rajah Expressway (AYE). Public transportation links include Tanjong Pagar and Downtown MRT Stations.
Regus’s business centre at AXA Tower is one of the company’s 30 business centres in Singapore and 3,000 worldwide.
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