“Coworking is here to stay as more consumers recognize the cost saving benefits and flexibility it offers”- Yann R. Deschamps, Head of Asia Pacific, Workthere
By: Saloni Bhalotiya, Research Associate, Ken Research Private Limited
Asia Pacific has evolved to become the largest market for flexible workspaces in the last 5 years. The industry has evolved ever since its inception and variety of entities have become the part of the industry value chain. In order to understand the dynamics in the industry and the role of flexible workspace brokers and aggregators we reached out Yann R. Deschamps, Head of Asia Pacific at Workthere
Here are some edited excerpts of the interview:
Tell us something about Workthere and how was it formed?
Workthere is an online listing platform for flexible workspace. It is a completely free web-based tool for occupiers, allowing any individual or business to search for a flexible office space, compare the options and shortlist centres which they would like to tour. A team of local experts would then provide the occupier with personalized advisory and negotiate terms and conditions on their behalf.
It was first launched in the UK in 2017 and has since expanded to 8 countries globally, with local teams servicing clients in Vietnam, Singapore, UK, Ireland, France, Netherlands, Germany, Spain, and the US.
Workthere was an idea formed by Cal Lee, a former graduate at Savills Plc. The idea won the Savills Dragons’ Den, and in May 2016, the Global Group Executive Board of Savills Plc gave full approval and funding to take the idea forward.
The flexible workspace industry has been growing drastically; in APAC the industry has registered a growth rate of around 32% during 2016-2019. What are the major growth drivers in the industry?
Flexible office space offers cost saving solutions for start-ups and enterprises compared to traditional office solutions. Since they do not need incur high capital expenditure from the fit out cost and they get to enjoy a flexible office space that includes utilities, ICT solutions and other amenities.
Other growth drivers for the industry include the growing importance of work-life balance amongst employers, demand for membership based flexible office space amongst major providers which helps expand companies’ geographical reach, as well as company’s recognition of flexible office space as means for talent retention and attraction.
In your opinion who is the major occupiers of flexible workspaces?
Enterprises are the key occupier of flexible workspaces as currently freelancers occupy only 15% of the space. As Portfolio level is becoming the preferred alternative solution for enterprises, they are looking to lease flex space when entering new markets or consolidate operations after M&A.
Do you think flexible workspace aggregators such as Workthere can drive the occupancy rate? If yes, how do aggregators drive the demand in the space?
I wouldn’t agree to the statement where aggregator platforms driving demand for flexible office spaces, since it is the product that drives demand. Aggregator platforms guide occupiers to select flexible office spaces that suit their requirement.
Workthere adds the personalized human touch to assist and ease the process for clients. In terms of demand, what aggregators do is make sure that the entireties of the co-working centres are listed and available on the website for perusal. A substantial investment is made in digital marketing to drive traffic to the website. But whether it is Workthere or the competition that closes the deal, the demand is still there.
What are the various decision-making parameters for a potential flexible workspace occupier?
Pricing, location, provision of value-add services, such as community areas, non-work-related services, events, legal advice, networking opportunities, productive business relationships and the subjective perception as “Vibes” of the space are a few of the major decision making parameters for flexible workspace occupiers.
What are the major challenges faced by flexible workspace industry?
Increased competition and low barriers to entry are some of the biggest challenges for flexible workspace operators. In order to respond to the competition, many operators resort to offering tenants more incentives to entice them to become members. Alternatively, operators may better incentivize brokers with higher commission fees to fill up their centres. It is crucial that operators provide services that truly value add to occupants to remain competitive in the industry. This may vary across different individuals and companies. Some may want a quiet environment to concentrate at work, while others may seek of more opportunities to network or even attend events.
Flexible workspace operators are coming with different pricing and branding strategy in order to maintain their competitive edge. For instance, IWG has followed the strategy of brand diversification in order to cater to different clientele through different brands including Regus, No18, Signature and Spaces. The Executive Centre which is an excellent service provider is now revamping its older centres to diversify from the typical and traditional serviced office. Also companies like The Great Room are looking to target niche markets with
Workthere has recently entered the APAC industry by launching in Singapore and Vietnam. How has been your experience so far and do you plan to expand in other countries in the region?
Even though we haven’t yet formally open deck in the following cities, we have helped clients in Taipei, Kuala Lumpur, Tokyo, Manila and Jakarta. Our next expansion will take place in Indonesia and more particularly Jakarta.
What are the upcoming trends in the industry and how do you see the future of the industry?
In the face of an uncertain economy ahead, we find that flexible office space will continue to thrive, given the cost saving benefits and lease flexibility it offers. Companies may choose to relocate to locations with lower rental cost or even reduce headcount. The flexible office space will be an ideal solution since they will be inclined to offer more tenant incentives to attract members under the competitive flexible office market. Tenant incentives could come in the form of attractive membership packages, additional meeting room credits, providing value adding services etc.
From a longer-term perspective, supply will be adjusted accordingly depending on the pricing and branding strategy adopted by the providers. We believe that prominent providers will continue to thrive and providers that are well-funded could potentially consolidate small to mid-sized operators in their respective markets. Flexible workspace operators will design coworking locations that provide work-life balance by accommodating lifestyle spaces such as gyms, sleeping pods, swimming pools, cafes, social space and relaxation/ quiet non-work-related space. Existing operators with sufficient funding will choose to renovate their existing centers accordingly in order to remain competitive. Eventually, occupiers will enjoy well designed spaces at appealing rates.
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