SMEs and start-ups create greater demand for communal workspaces

Klang Valley has housed some of the international co-working space players in setting their footprints locally


The mushrooming of local start-up companies and small and medium enterprises (SMEs) has led to increasing demand of communal working spaces, or better known as co-working spaces, particularly within the Klang Valley area.

For the past years, the Klang Valley has housed some of the international co-working space players in setting their footprints locally.

To date, names like Regus and Common Ground have been cited as the working address for most startups and SMEs.

Knight Frank Malaysia Sdn Bhd ED for corporate services Teh Young Khean said co-working space is expected to fill up the property market as another 300,000 sq ft of the working spaces are expected to enter the market in 2018.

“We can see that the local operators are managing some of the international communal space brands.

“As of last year, co-working spaces in the Klang Valley measured around 700,000 sq ft, which were purposely built for office and mainly driven by the international players.

“Taking into consideration the burgeoning from SMEs and start-ups, the number can easily go up to one million sq ft by the end this year,” he told The Malaysian Reserve (TMR) in an interview recently.

Teh said the flexibility of the niche sector has been the main driver for SMEs and start-ups opting to operate in an environment that does not require strict commitment.

“Particularly for start-ups, it is more beneficial to their business community and provides networking opportunities with flexibility and less commitment as the terms of the agreement would be made, unlike the common tenancy agreement.

“It also benefits entities with lesser capital expenditure set aside because renting spaces usually comes with renovation cost, and co-working spaces already take care of that,” he said.

However, the positive sentiment towards the nomadic-style working environment is thought to worsen the office oversupply in the Klang Valley.

“The vast majority of the occupants would be SMEs and start-ups who typically housed 10-15 staff members.

“We used to cater a client who moved from a proper corporate office in Petronas Twin Towers to the co-working space in Damansara, Common Ground.

“They have about 15 people on their staff and they found the flexible environment works for them because most of them are travelling across the region,” Teh said.

Despite the positive sentiment, he said giant organisations are not expected to shave their corporate skin and adopt the less-rigid working style.

“Knight Frank’s regional office is also tracking the trend of notable corporate entities in the banking sector in Europe.

“It showed that they are embarking on the co-working concept, but specifically only to non-traditional division,” he said.

According to Teh, even financial institutions seem to have improved results from their employees who are sent to work in a co-working space.

“Within banks and accounting firms, they think with being in a loose environment, the employees could perform a better result.

“They have run tests of feasibility for the co-working concept in other countries, and it showed some good signs as Europeans are more likely to take the risk in changing their work style,” he said.

Nonetheless, Teh said the trend may be slow in Malaysia.

“But I doubt that the trend will catch up in Malaysia anytime soon for top corporate entities as the current accounting firms are still acquiring the traditional office spaces,” he said.

Local co-working space provider, PAPER + TOAST also jumped on the bandwagon when it first started in 2010.

Business development director Wan Imran Wan Rahaman said its founder ventured into the niche sector following his observation in changes of working behaviour.

“The idea sparked from the technology that enables remote working and addressing the behaviour of working adults including nomadic lifestyle, cost saving and flexibility to network,” he told TMR.

Wan Imran added that part of PAPER + TOAST’s concept is to provide the “need” element, a space that meets their needs in networking with like-minded individuals.

“When we first started, the concept of co-working was barely in existence in Malaysia, which made it hard to explain what we were doing.

“Hence, we decided to incorporate food and beverages as part of the human need element,” he said.

Other than providing co-working space and rental, PAPER + TOAST also holds business programmes such as research and validation, business planning, digital marketing and sales.

The community also hosts events for businessmen to share their experience and knowledge in building their business.

WORQ has provided membership for companies such as Enso Media, BFM Edge Education and The Delancey Co

Meanwhile, co-working space WORQ marketing and operations manager Jonathan Lau said the company focuses on providing a community for visitors over human behaviour needs.

“There are many different types of co-working spaces and we’re trying to educate our potential members on finding their perfect fit. Some are great at providing a beautiful workspace and some cater to the corporate business.

“We provide hyper-localised communities through facilitating deeper connection,” he said.

WORQ has provided membership for companies such as Enso Media, BFM Edge Education Sdn Bhd and The Delancey Co.