It will be a new way to attract tenants.
Landlords in Singapore fear losing their tenants as a massive amount of office space enters the market, but the rising popularity of co-working spaces may just save owners from the dreaded vacancy spike.
According to Christine Li, research director at Cushman & Wakefield Singapore, landlords can use the co-working concept to attract and retain tenants rather than engage in an intense price war on rental incentives and subsidies.
“One suggestion might be for landlords to consider bundling a portion of the vacant space together with committed space under a “coworking concept” for quality anchor tenants,” Li noted.
In particular, introducing the co-working concept could lure more tech firms to traditional office buildings. A basket of tech firms tracked by Cushman & Wakefield shows that their space requirements have increased by over 50% annually on average since they first set up permanent offices in Singapore.
However, rigid terms in their existing lease terms are stopping them from instantaneously rescaling their space requirements. Thus, the co-working concept presents itself as an ideal option for businesses to scale up or down depending on their performance without incurring hefty upfront rental costs.
“Landlords could convert undesirable or non-performing space to cater to the needs of tenants, while tenants will benefit from the extra option to rent the co-working space on an as-need basis,” Li said.
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