HK Landlords & Developers Venture Into Serviced Office And Coworking Space Due To Bleak Traditional Office Market
HONG KONG – The sluggish demand for traditional office premises is prompting property owners and developers to foray into the flexible office sector, which mainly comprise coworking spaces and serviced offices, reported the South China Morning Post (SCMP) on Wednesday morning (16 December, SGT).
“The serviced offices sector continues to evolve as landlords are now entering the market in direct competition with established players,” as small businesses will continue to consider flexible office space in a bid to maintain flexibility and reduce upfront capital expenditures (CapEx), said Cushman & Wakefield’s (C&W) Head of office services and Executive Director in Hong Kong.
The expansion into the flexible office market by developers and traditional office lessors comes as some large operators have relinquished office premises in Hong Kong or have closed their operations in the territory.
Property consultancy Knight Frank revealed that from the market’s heydays in mid-2018, the number of flexible office providers in the territory have slightly fallen from 15 to 13 currently. Also, the number of flexible office centres declined from 39 in 2018 to 34 at present.
American coworking space provider WeWork gave up several branches in Hong Kong, including Hopewell Centre in Wan Chai, Hysan Place in Causeway Bay, and the Harbour City complex in Tsim Sha Tsui. Similarly, China’s KrSpace surrendered its branch in Times Square and exited the territory.
Still, Eaton Club’s Head Wendy Lam noted that the prevailing economic situation is somewhat conducive for the flexible office market. The boss of the coworking space arm of Hong Kong developer Great Eagle Holdings explained that, amidst the COVID-19 pandemic, businesses are adopting a “core-and-flex” strategy. Under this approach, which helps reduce CapEx, important teams are accommodated in offices near Hong Kong’s Central district, while others work from flexible offices elsewhere.
“A lot of landlords are thinking about [entering the flexible office sector]. It is possible they may open their own centres, because this model works,” noted Lam, adding that demand for such office space is anticipated to rise.
Word on the market is that real estate developer Hongkong Land is poised to establish a coworking facility, but it didn’t reply when requested to comment.
In 2014, Swire Properties set up coworking space Blueprint at its Taikoo Place property in Quarry Bay.
V Point commercial building’s owner also runs a coworking facility dubbed as V-Co, after its previous operator closed in 2019. Kerry Hotel in Hung Hom also teamed up with theDesk to operate a coworking space vacated by its former operator.
Furthermore, Henderson Land turned the office premises left by WeWork in H Code at Central into a coworking facility known as CodeWorks.