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As office landlords face stiffer competition for tenants amidst the large amount of incoming supply, landlords are encouraged to consider offering co-working spaces to attract and retain clients, according to Cushman & Wakefield Singapore.
“One suggestion might be for landlords to consider bundling a portion of the vacant space together with committed space under a “co-working concept” for quality anchor tenants,” said Christine Li, Research Director at Cushman & Wakefield Singapore.
Under a shared office set-up, workers from different companies share a work area, facilities and services. This type of office operates largely on a hot-desking basis, where work desks are barrier-free and are available only on a first-come, first-served basis. Thus, one can sit with people with similar or different expertise.
“Landlords could convert undesirable or nonperforming space to cater to the needs of tenants, while tenants will benefit from the extra option to rent the co-working space on an as-need basis.”
Cushman & Wakefield said, co-working space is attractive to tenants as it is more affordable than traditional leases and it does away with rental deposits, a boon to cash-strapped entrepreneurs. Under this set-up, landlords charge a monthly membership fee for the use of hot-desking and shared facilities.
This concept is also appealing to businesses, especially tech firms, as it allows them to downsize their operation, or expand without incurring hefty rental costs.
In fact, a study by Cushman & Wakefield revealed that the space requirement of multinational tech firms in Singapore have increased by over 50 percent per year on average since they first established a permanent office here. But the rigid terms of their existing lease agreement prevent them from instantaneously changing their space requirements.
In addition, this set-up provides good profits. Based on a Deskmag co-working survey, 72 percent of all co-working spaces in the world have become profitable after more than a year in operation.
Given the stable demand and profit, the property consultancy believes that now is an opportune time for co-working operators to expand as a total of 3.6 million sq ft of grade A office space is projected to enter the market in 2016.
Since the first co-working office space opened in 2009, there are now nearly 40 shared offices in the city-state.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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