‘It’s a Flight into Flexibility’: Why Coworking Spaces Are Seeing Increased Demand Amid COVID-19

SINGAPORE: As the COVID-19 pandemic progresses, co-working spaces in Singapore are seeing signs of recovery, driven by companies seeking flexible contracts and people hoping to escape working from home.

While business was hit hard during the country’s “circuit breaker,” operators said occupancy rates have increased gradually since then, easing initial concerns that the pandemic would wipe out the industry.

These coworking centers revolve around shared services, with offers ranging from open spaces for individuals to studios dedicated to companies.

“Our shared desktop membership was at very healthy levels, but when COVID-19 hit, at its lowest point, it dropped to maybe 30 percent of that. But now it’s slowly warming to around 70 percent, ”said JustCo Vice President and Head of Singapore and Indonesia Brandon Chia.

The partner has 19 outlets in Singapore, which house both individuals and companies.

READ: Is safe distancing enough to save Singapore’s work and living spaces?

Corporate clients, who were big drivers of demand for flexible workspaces before COVID-19 hit, have also returned to the market.

“We lost some occupancy during the circuit breaker, but we’re actually starting to see a bright side,” said Junny Lee, founder and CEO of The Work Project, which has six locations in Singapore.

“Businesses were down significantly back then, but going into Phase 2, those existing clients started to modestly expand again,” said Lee, whose firm primarily serves businesses.

Utilization rates, or how many members are physically present in the space, have also increased by 30 to 40 percent for both operators, compared to the minimum activity during the breaker period.

Interested parties are also getting in touch.

The Great Room, which has five branches in Singapore, said there has been a “notable increase” in inquiries from companies since the third quarter of this year, while questions about hot desking plans have risen 20% year-on-year. , according to the company’s chief operating officer, Su Anne Mi.

For JustCo, Chia said the company is now receiving about 85 percent of the number of inquiries it received before the pandemic.

Inquiries for The Work Project have risen to similar levels. However, Mr. Lee is cautious about using these figures to measure positive business sentiment, saying that inquiries often come from customers in larger spaces looking to downsize, perhaps suggesting “contractionary activity.” .

WHY THE DEMAND?

Co-working spaces offer shorter leases compared to traditional office spaces, which generally secure contracts for at least two to three years.

This flexibility has become an even greater draw for companies, facing economic uncertainty amid the protracted pandemic.

That means that while the overall office market has been slower, co-working space has seen an increase in demand for certain products, according to Rick Thomas, Colliers International’s chief executive officer and head of occupancy services.

READ: Comment: COVID-19 to reshape the outlook for Singapore’s office real estate market

“Previously, it was very common for companies to take a year or so … During COVID-19, people are more cautious and look for shorter periods like six or three months,” said Chia of JustCo.

Spaces can also accommodate companies seeking to house segregated work teams as part of a “flexible and central” model, where part of the workforce works in such spaces, while the company retains a traditional central office space. That bodes well for business continuity plans, Chia said.

Operators also believe that people are returning to coworking spaces because working from home may not be sustainable in the long term.

“Through the pandemic, many companies have learned that working from home is only effective for a finite period of time,” said Ms Mi.

“Some may enjoy working from home, but for most, they find that a conducive office environment allows for greater focus and productivity, team collaboration and human connection.”

However, some companies remain cautious when renting coworking spaces.

Lee from The Work Project told CNA that clients are opting for smaller spaces, when they used to take office sizes that matched their template or more.

However, he noted that customers also often opt for a clause that allows them to add space if necessary.

To better meet the needs of businesses, The Great Room has created “hybrid memberships” that allow members to use both dedicated office space and shared desktop memberships.

With the world still in the midst of the pandemic, operators have also had to implement strict health and safety protocols to secure their members.

At JustCo’s newer office at The Centrepoint, for example, touchpoints have been reduced using facial recognition entry systems and cardless access.

It also uses software for spatial analysis that provides members with real-time updates on crowd levels at various venues.

Staff members will also receive notifications about areas that have become crowded, allowing them to quickly disperse crowds, Chia said.

PROVIDING EVEN MORE FLEXIBILITY

Coworking spaces optimize costs by adjusting to the template. With the need to tighten their belts amid the economic downturn, one platform, Switch, offers a more flexible option: workspaces per minute.

“If you consume 65 minutes, you pay exactly 65 minutes. You don’t pay for a second hour, you don’t pay for a whole day or a whole month, ”said Dominic Penaloza, CEO of REinvent, a proptech technology company that created the platform on demand.

READ: How the COVID-19 lockdown in Malaysia brought crisis and opportunities for co-working spaces

Mr. Penaloza added, “It’s important to our business clients because when you multiply (the savings) by 1,000 employees, it makes a gigantic difference.”

“It’s a flight to flexibility,” he said. “And everyone is very concerned about financial conditions and large dollar commitments.”

Switch users can reserve spaces by the minute in their separate booths, which are located in “high-traffic locations” in Singapore, such as in suburban shopping malls.

They can also reserve seats at certain co-working centers, including some at JustCo and The Executive Center. Altogether, the platform has about 2,500 “seats” in its inventory.

Since its launch in late October, the Switch has amassed more than 10,000 members.

Mr. Penaloza added that the space-on-demand concept would be the next step in the spectrum of “sensitive real estate” after flexible workspace.

OPTIMISTIC PERSPECTIVES

Traders said they are quite optimistic about the sector’s prospects, unless the public health situation deteriorates.

“There doesn’t seem to be a long-term mass migration to work from home … And people who demand flexibility to prepare for the future or to be unpredictable, those trends work in our favor,” said Mr. Lee of The Work Project .

Mr. Chia agreed, saying that JustCo is also exploring “four or five” potential sites for new outlets, confident of the eventual recovery of the sector.

Net rented space leased to collaborating operators grew only about 3% this year, a significant slowdown from 16% in 2019, according to Colliers International.

However, her head of research, Tricia Song, believes that flexible workspaces are here to stay.

“We forecast that supply will similarly grow 3% in 2021 … (which will be) a year of recovery in demand to catch up with supply, and we could see more significant growth in supply in 2022,” he said.

Mr. Lee added: “The real milestone will be when there are no restrictions on people coming to work. I think when that happens, there will be a very strong demand ”.