It targets established, value-sensitive corporates that make up the fastest growing segment in Asia.
As the city’s flexible workspace market rapidly matures, Singapore-based premium hospitality-led co-working space operator The Great Room is sharpening its focus on high-end clientele as part of the growing movement towards industry segmentation. Offering a pricier value proposition than most flexible work set-ups with monthly hot desk rates starting from $750 and a dedicated office going for $2,500 a month - 20% higher than WeWork desks - The Great Room is specifically targeting deep pocketed “grown-ups,” high-growth technology companies and innovation teams of established multinationals that constitute a stickier source of rental income.
In fact, startups account for only 25% of The Great Room’s tenant mix as the space remains fixated on luring and retaining Fortune 500 companies, enterprises, SMEs and private equity houses which have an average tenure of 1.5 to 2 times longer than a typical startup.
“They are more value-sensitive than price sensitive providing significantly larger margins as well. It is a segment that is the largest, growing the fastest and has the lowest penetration in Asia currently. We want to race to build on our dominance in this attractive segment,” according to Jaelle Ang, CEO of The Great Room.
Co-working has seen unprecedented growth in Singapore, after surging 42% to 1.4 million sq ft in 2018, data from Edmund Tie & Co, following a near three-fold increase in 2015-2017. With more supply set to come online and only so much space to ground in land-starved Singapore, the segment has witnessed broad-based consolidation with the most saturated segments in single-location operators managing spaces below 2,000 sq ft and catering largely to small businesses and freelancers, according to Colliers.
Established in 2016, The Great Room counts three premium spaces in Singapore and a hub each in One Taikoo Place in Hong Kong and Bangkok in its portfolio. The operator draws inspiration from luxury hotels and business clubs designed to help tenants strike the balance between productivity and creativity. Colliers ranks The Great Room as the seventh largest flexible workspace operator in Singapore with 2.8% market share and an estimated portfolio of 76,000 sq ft.
In an exclusive interview with Singapore Business Review, Ang shares the secret to the firm’s strategy and vision for Asia-Pacific.
With the co-working set-up becoming increasingly popular in Singapore, what are your plans to ensure that The Great Room remains competitive in the long run?
The future of work is about flexibility, freedom and experience. It’s all about giving employees the freedom to choose where they work, when they work, and how they work best. The Great Room’s ability to deliver this flexibility, freedom and experience while still fulfilling the required standards for privacy, security and robust design is the reason for quick adoption of high performing MNCs and enterprises like HSBC, FTSE, IAG and fast growing fintech companies like Gobear.
The Great Room fills a gap for the enterprise which wants the infrastructure of grown-ups with the soul of start-ups.
The revenue opportunity for The Great Room is our pursuit of the all day work, play,learn and grow journey. Apart from being a place to work, we want to serve your first cup of cappuccino to your last night cap and everything in between from business coaching to learning from field-tested experts during lunch time. Most of all, as people decrease their frequency of going to malls, brands need to engage their customers and build a new customer base by going where their customers are and create highly entertaining and immersive experiences for them to experience the brand.
We are at the forefront of creating and monetising these brand experiences and have worked with Tiffany’s and Co., Leica, Nars, Moet Hennessy Diageo, Impossible Foods and so on.
Tenants turning to co-working spaces usually embrace the flexible workspace set-up due to the cost savings they generate compared to renting conventional office spaces in the CBD. With relatively higher prices compared to larger co-working operators in Singapore, how do you market The Great Room to future tenants?
It’s not just flexibility from a physical space perspective, it’s about being able to leverage the hospitality, amenities and services infrastructure that The Great Room provides in a precinct to improve company operations and culture. Scaling operations and culture while maintaining flexibility is the grand prize for great companies.
We have a deep understanding of how people work. Placing building owners at the centre of the partnership will take the work experience to a whole new level. We are indefatigable working on fulfilling these needs better every day.
At the end of the day, we cater to companies that are more value rather than price-sensitive – our members have access to town hall space, kitchens and pantries, and vibrant community events – each an extension that adds to their overall footprint within a building.
We believe that ‘great design attracts a like-minded community’. We have member companies from technology, finance, lifestyle and creative industries at The Great Room who desire to ‘have it all’ - the infrastructure for peak performance and productivity plus the energy and culture of innovative start-ups. They are curious and ambitious and would find themselves as easily attracted to sessions of CEO media coaching as they are to rubbing shoulders with other power brokers at a whiskey-tasting session.
To ensure competitiveness, co-working space operators have been exploring niche segments and targeting the health and wellness sector and creative agencies. Against these developments, how do you see the coworking landscape in Singapore and by extension, Asia, developing?
The biggest theme and opportunity in the sector will be segmentation in the coming 12 to 18 months. We already saw that coming when we started in 2016. Consolidation has been predicted, but I think that it is unlikely that it would become a single mass-market product. Instead, the overwhelming response and take up of shared workplaces in Singapore and larger Asia is proof that the sector is disrupting work as we know it and will continue.
For businesses to get more out of our talent, we will need to interrogate the ‘way it has been’ from the perspectives of work productivity, business relationships and interactions, work-life balance, sustainability, health and wellness programmes, learning opportunities, high value networking, lifestyle experiences and work environment design.
Every link is a challenge, an opportunity to push the envelope and to drive business value. It is all up for grabs for the shared workplace provider who has all these talents being in their physical space for most of their waking hours. Being smaller and having better unit economics is a big advantage for us.
The next largest opportunity for The Great Room is getting in very early on with developers as they plan their expansion and development. Rather than just providing the flexible work piece, we are becoming the go-to partner to mastermind, design, build and operate the integrated amenity, flexible working, wellness and nourishment offering in the office building or mixed-use development.
You’ve just opened your first space in pricey Hong Kong – can you tell us the reason behind this move? Where are you expanding to next?
We believe in controlled growth in a sustainable way. We prioritise launches in markets that our members want to do business in. We do not believe in expanding at breakneck speed whatever the costs.
Hong Kong is a very vibrant and exciting market for us. Many decision makers for the Asia-Pacific region reside here. We see winning Hong Kong as a very important springboard for our expansion strategy across Asia-Pacific. One cannot win Asia-Pacific without winning Singapore and Hong Kong. Regionally, our goal is to establish presence in key financial centres in Asia in the next 3 years.
We are already in negotiation with Hong Kong landlords for strategic partnerships in Hong Kong and key gateway cities in China.
What milestones are you hoping to achieve this year? What are your long-term goals?
We have been fortunate that asset owners have offered us very exciting opportunities to target the premium and corporate sector and build a new coworking asset class.
We are also positioning the brand, the business and the capital structure to pursue growth. To do this, we hope to add more strategic partners in our upcoming Series B Fundraise. In the mid-to-long term, we are looking at disrupting a very archaic sector of commercial real estate and hospitality together with our important stakeholders like real estate and hotel owners to build a sustainable premium flex space ecosystem.
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