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With its shorter leases, the flexibility offered by co-working spaces has become a bigger lure for companies given the economic uncertainty brought about by the COVID-19 pandemic.
While co-working spaces have been hit hard during the circuit breaker period, operators have been witnessing a gradual increase in occupancy rates as companies seek flexible contracts, reported Channel News Asia (CNA).
Brandon Chia, Vice President and Head of Singapore and Indonesia at JustCo, said their hot desking membership, which dropped to 30% of its pre-COVID-19 level, is now “slowly warming up” to around 70%.
Accommodating both enterprises and individuals, JustCo has 19 outlets across Singapore.
Corporate clients have also started to return to the market. Corporates are considered large driver of demand for flexible workspaces prior to the pandemic.
“We lost some occupancy during circuit breaker but actually we’re starting to see some silver lining,” said The Work Project’s Founder and CEO Junny Lee as quoted by CNA.
“Companies downsized significantly back then, but entering into Phase 2, those existing customers started expanding modestly again,” noted Lee, whose firm has six branches in Singapore and largely caters to enterprises.
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Both operators also saw utilisation rates, or how many members are actually present within the space, climb to around 30% to 40%, compared to the minimal activity registered during the circuit breaker.
Enquiries has also been on the uptick, with The Great Room posting a “notable increase” from companies from Q3 2020, while questions about hot-desking plans rose 20% on-year, said its Chief Operating Officer Su Anne Mi.
With its shorter leases, the flexibility offered by co-working spaces has become a bigger lure for companies given the economic uncertainty brought about by the COVID-19 pandemic.
As such, while the overall office market has been slower, operators of co-working spaces saw a hike in demand for certain products, said Rick Thomas, Executive Director and Head of Occupier Services at Colliers International.
“Previously, it was very common for firms to take up a year or so … During COVID-19, people are more cautious and looking for shorter periods like six months or three months,” said JustCo’s Chia as quoted by CNA.
Operators believe that people are returning to co-working spaces since working from home may not be sustainable in the long run.
“Through the pandemic, many companies have learned that working from home is only effective for a finite amount of time,” said Mi as quoted by CNA.
“Some may enjoy work from home, but for the majority, they find a conducive office environment allows for greater focus and productivity, team collaboration, and human connection.”
Barring any deterioration in the public health situation, operators are fairly optimistic of the sector’s outlook.
“There doesn’t seem to be a long-term mass migration to work from home … And people demanding flexibility for future-proofing or for unpredictability – those trends come in our favour,” said The Work Project’s Lee.
In concurring, Chia said JustCo is looking to expand at four or five potential sites.
Colliers International revealed that net lettable space leased to co-working operators increased by just 3% this year, down from 16% last year.
Despite this, Tricia Song, Head of Research at Colliers, expects flexible workspaces to stay.
“We forecast supply to similarly grow 3% in 2021… (which will) be a year of recuperation for demand to catch up with the supply, and we could see more significant growth in supply in 2022,” she said as quoted by CNA.
Lee added that the real milestone would be when “there are zero restrictions on people coming to work”.
“I believe that when that happens there will be very strong demand,” he said.
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