Luxury co-working spaces on the rise in Singapore
The Work Project launched MARK, its brand new members-only business club, whilst The Great Room has just signed on a 15,000 sqft space at Raffles Hotel.
Stepping into The Work Project's co-working spaces, the experience is more akin to checking into a high-end hotel rather than clocking in a bustling open-space office. Gone are the bean bags and game rooms, trappings meant to attract young entrepreneurs. Instead, members are given access to luxurious office spaces with an art gallery and vertical garden.
Established in 2016, The Work Project is the fourth largest co-working operator in Singapore, with five luxury premium spaces in the island, and one location in Hong Kong. In Capital Tower alone, the operator oversees 50,000 sqft of space across three different levels, featuring 800 work stations and an in-house premium catering service. Roughly 20% of this expansive area is dedicated to training workshop and conference facilities, popular amongst corporates that want to hold training sessions and regional gatherings, according to The Work Project founder and CEO Junny Lee.
"What you can typically find in the market is co-working spaces with some nice furniture, and it pretty much just ends there," said Lee. "But I think luxury is so much more than just a couple of small design aspects."
Design, performance and service
The Work Project considers luxury on three fronts, according to the founder, which justifies the premium price for more established entrepreneurs and corporates. First is in the space's design, which did not scrimp on materials -- be it from luxury fabrics used in top hotels and sourced from different parts of the world, to top-of-the-line furniture from makers such as Ralph Lauren.
The second aspect of luxury the operator focuses on is in the space's performance. "It's what often happens with co-working spaces, you find nice design details but when it actually comes to the workspace itself, the performance is not so good," said Lee.
"Performance is really important because we want our member companies to do the most productive work and to be as successful as they can possibly be," he added, citing the operator's use of workstation desks and tables from esteemed Italian and Swiss brands.
MARK at The Work Project Capital Tower was designed in collaboration with Hassell Studio.
The operator's third pillar for luxury is in service and hospitality, ensuring that it complements the space's impressive visual design and workspace performance. "Just providing reception and cleaning services for us is not really meeting the entire needs of our customers. We go beyond that," said Lee. The Work Project's members also gain access to hosting spaces such as Omotesando Coffee, the Mark C suite lounge.
Rapid expansion and demand
With The Work Project aiming to progressively expand to Tokyo, Sydney and Melbourne in addition to the 100,000 sq ft of space it launched in the past month, luxury co-working operators are only set to continue expanding throughout the rest of Asia.
"We believe that flexible workspace is now fully established as an occupier sector, serving an important market niche. We see particular growth potential at the premium end of the flexible workspace market, especially for those operators focusing on provision of amenities and hospitality-related services," property consultancy firm Colliers International said in a report.
Premium hospitality-led co-working space operator, The Great Room, is banking on this opportunity as it confirmed its fourth Singapore location spanning 15,000 sqft in Raffles Hotel.
“Although we are a young company, we have been very encouraged by the strong pipeline of demand for our premium co-working spaces,” said Jaelle Ang, co-founder and CEO of The Great Room, which launched in 2016 and now has five locations in Singapore, Hong Kong and Bangkok in Thailand. “When we started, we identified this segment of businesses who need enterprise-level infrastructure with the soul and energy of a start-up; it was thought of as a niche segment. But unsurprisingly, many businesses want it all. For the key Asian financial centres like Singapore and Hong Kong, the premium segment we are in, is the largest opportunity, fastest growing and has the highest margins within flexible working.”
Membership at The Great Room’s existing Singapore locations start at $2,500 a month, 20% higher than the current price of WeWork’s desks, which is currently one of the largest players in the co-working market. The Great Room at Raffles is expected to be more pricey as it targets ‘grown-ups’, or established companies and corporates, said Ang.
Ang notes that demand for flexible co-working spaces is accelerating as companies explore different ways of optimising space per worker and keeping 20% to 30% of their total real estate requirement as flex rather than all core with long, locked-in leases. The move is further reinforced by 2019 GAAP accounting rules that demand increased transparency and efficiency related to real estate costs.
To date, The Great Room reports that they already have early commitments and would expect to hit 50% occupancy when they open in mid-2019.
In Singapore, IWG, which manages the Spaces and Regus brands, remains the largest flexible workspace operator with 23.5% market share and an estimated portfolio size of 650,000 sq ft. New York-based WeWork which earlier acquired Spacemob in August 2017 to boost its regional presence trails behind the London-listed giant along with JustGroup who each hold around 12% and a portfolio over 330,000 sq ft. Meanwhile, The Great Room, is the seventh largest Singapore operator with an estimated portfolio size of 76,000 sq ft.
Ang says that the demand for flexible working space as a percentage of commercial office space to grow about 10 fold in the next 10 years - from the current 2-3% to 30% by 2030.
The Great Room plans to tap on this opportunity by exploring next locations in tandem with the firm’s increasing memberships. “In Singapore, we are in talks for further expansion as our current 3 locations are already at run-rate occupancy. Many of our enterprise members have multi-city memberships with us and our goal is to have sites in the key Asian cities that are consistent with their demand for the best locations and building quality,” Ang said.