COVID-19 Has Been Terrible For Coworking Sector
SINGAPORE – The pandemic has gravely affected flexible workspace operators across the globe, particularly those in Singapore, as the coworking industry is intended as a platform for fostering networking between individuals and businesses. But this has been severely curtailed in a socially distanced world, reported The Edge Singapore on Friday morning (16 October).
“Globally, COVID-19 has been terrible for our industry because in a way we have the same weaknesses as the hospitality sector, like hotels. We rely on welcoming strangers into one space which we operate and are liable for,” said Matthew Chisholm, Chief Operating Officer (COO) of coworking space provider Arcc Spaces.
On 1 August, the company opened a new 19,000 sq ft coworking centre at the 20th level of One Marina Boulevard in Singapore. So far, 30 percent of the office space there has been taken up. To lure clients to work there, it has halved the office rent or membership rates there to S$650 a month.
If someone wants to work at any of Arcc Spaces’ 4 coworking centres in Singapore – Suntec, 99 Duxton, 75 High Street, and One Marina Boulevard – he or she needs to pay a monthly membership rate of S$500.
The company initially planned to open the coworking centre in One Marina Boulevard in April 2020, but it was delayed because of the virus outbreak. Still, it was opened in a time of sluggish demand for office space as most employees work from home.
According to Cushman & Wakefield (C&W), rents of Grade A office space in the city-state’s central business district (CBD) slid by 5.1 percent on a quarterly basis to S$9.84 psf per month during the third quarter. The property consultancy forecasted that office rents in Singapore could drop by 10 percent for the whole of 2020, with further rental drops by 2021. While the office leasing market could start to rebound by 2022, the full recovery swing could likely occur two to three years later.
Amidst the dismal market sentiment and the uncertain future, Chisholm noted some changes in the behaviour of Arcc Spaces’ clients. Although half of its customers used to mainly come from businesses, the coworking space operator now has to transact with individuals linked to companies, which he describes as Business to Business to Consumer (B2B2C).
“In the past, company X would have been 50 people, and John Tan was only one of them. I didn’t care about John Tan, I just wanted to do a deal with company X. That was a B2B deal… [But] now, those 50 people are all working from home, so company X may say: ‘No, we don’t need 50 people. But John Tan runs the collaborative team that does creative design, and creative design needs to get together and collaborate’.”
Basically, Arcc Spaces previously entered into agreements with businesses so it can accommodate their full team. But now, it has to offer its services to smaller teams within these companies.
“It’s become a different kind of conversation, where the company can’t accommodate everyone, so they then break it down” so that only groups or teams whose productivity has been impacted by working from home needs to perform their job in a coworking space, added Chisholm.