Co-working spaces in demand


CO-WORKING space operators are taking a bigger bite out of their corporate tenants as larger companies consider making remote work more permanent.

A market study by shared office space provider WORQ showed existing renters expanding in size as more corporations allow their employees to work from home.

WORQ co-founder Stephanie Ping said the size of teams that the co-working space is servicing has increased by 10 to 50 times as companies are making flexible working arrangements a firm fixture for their entire workforce.

“We foresee demand to accelerate post-lockdown as the work-from-home experiment has proven its viability to become a permanent feature of our work lives,” she told The Malaysian Reserve when contacted recently.

Ping said the flexi-office space option allows companies to maximise the benefits of a distributed workforce and save on rental costs.

The expansion meant that new enquiries on shared workspaces have dropped by an average of 20% this year throughout the second Movement Control Order (MCO 2.0).

“We saw an increase in enquiries pre-MCO, primarily from small and medium enterprises (SMEs), as they opted for office solutions that provide more flexibility in terms of leases and fixed commitments.”

Ping said demand has since grown more robust with a slight decrease in enquiries, especially from SMEs, due to the pandemic.

“Nevertheless, the number of enquiries coming in for larger teams has been significant as we’re starting to see large corporates exploring flexi-office solutions, shifting towards a hub and spoke model.

“We foresee that the adoption of flexi-office solutions will increase in the coming years, as the pandemic has accelerated the need for remote and flexi-working.”

The hub and spoke model is a form of transport topology optimisation in which traffic planners organise routes as a series of “spokes” that connect outlying points to a central “hub”.

Some examples of large companies that operate in co-working spaces include Petronas Dagangan Bhd, Paramount Corp Bhd, AirAsia Bhd’s logistics arm Teleport, and online used car trading platform Carsome.

Ping said there is a need for businesses in the office space industry to be innovative and offer more variety to their solutions as demand rises.

“The demand for innovative products is regularly increasing as customers opt for more flexible solutions to transition towards a hybrid workforce.

“In the past, renters and tenants accepted a ‘bare bones’ product, which included those that come with long leases.

“Nowadays, tenants want a higher level of service and lesser burden, with on-demand movement, pioneered by organisations like Grab Holdings Inc,” she said.

WORQ’s market research data indicated that the option of working from a co-working space has become quickly accepted.

“If a co-working space operator’s business model is well-structured, it can continue to grow by establishing more and more outlets, as each outlet will be profitable and grow exponentially,” the report read.

Another market research by JLL Property Services (M) Sdn Bhd showed that Malaysia is lagging behind the regional average market penetration rate.

“The regional average is at 3% while Malaysia’s penetration is at 1%. This means that Malaysia is lagging by 2%, in a market that is ready for fulfilment.

“In the longer run, JLL predicts that 30% of office spaces will move towards the usage of flexible space. Hence, the current 2% ready demand will grow even further,” it said.

Ping said co-working spaces have to be reduced to comply with MCO rules, which require a minimum one-metre distance between workspaces.

“Number of seats per table at all common areas, including meeting rooms, has been halved, while event space is temporarily closed to reduce the entry of visitors.

“Capacity of meeting rooms, discussion rooms and private offices have also been adjusted to follow the regulation,” she said.

Commenting on “work from hotel” packages offered by various hotels including Shangri-La Hotel, Four Points by Sheraton and Grand Hyatt Kuala Lumpur, Ping said the co-working space operators sees hotels as contributors to a variety of working methods.

“As the workforce transitions to more flexible working, we certainly would like to work with them. WORQ’s business philosophy is built upon working together, having a magnitude of partners to bring the best possible outcome to our customers,” she said.

Read our previous report here

Office rental rates remain under pressure