Flexible workspaces are no longer just the choice of in-the-know tech start-ups, digital businesses and small creative companies. In the last few years the market has snowballed across the world, with increasing demand not only from the kinds of businesses mentioned above, but also from more traditional, corporate companies. And nowhere is currently more dynamic than the APAC region, where global players are moving in, keen not to leave this huge potential market to the ambitious homegrown companies already filling the space. In both cases, huge rounds of investment are leading to rapid expansion.
China sees itself as transforming from the world’s factory to the world’s global innovation centre, so it’s not surprising that flexible workspaces are forecast to expand enormously by 2030, due to take up perhaps 30% of the market. Economic uncertainty, the high price of traditional office space and the different expectations of millennials are also driving the market. WeWork are expanding fast, raising $500m in 2018 in order to expand from their original locations in Beijing, Shanghai and Chengdu into six new cities. In addition, WeWork bought Naked Hub in 2018, an offshoot of China-based resort company Naked Group and one of its largest competitors. As you would expect though, WeWork have some serious local competition, including Ucommune, who raised significant amounts of capital and swallowed up a number of smaller rivals in 2018, and KR Space. The latter, founded by Liu Chengcheng, believe they can conquer WeWork because of their better knowledge of the local market, in various aspects ranging from building and safety regulations to the kind of interior design best suited to China’s work culture. Liu said in an interview with Forbes “There are so many China-specific requirements…I don’t think WeWork really understood all of these in its early days here, which was why they were expanding slowly.”
In Singapore, flexible workspace has almost tripled since 2015 and saw the sharpest growth in its history in 2017 at 44%. The industry is in the top five office occupiers within the Singapore market. WeWork, Ucommune and IWG all have interests in the region, with another major player being home-grown co-working space provider JustCo. This high level of competition has created benefits for customers, with generous offers available on sign-up, including free rent for several months. So far, most flexible working space has been concentrated in the Central Business District but it’s now starting to spread outside this location, particularly into the shopping areas where there is plenty of vacant floor space. No 18, part of the IWG stable, are planning to open near the city metro station later this year. It will be their first Asian location and part of a worldwide roll-out of the brand, which ‘draws on the private club space, but with a global network’ according to Regus Asia Pacific Vice President for Network Development, Nigel Barnes.
Meanwhile in India, the second largest market for flexible workspaces after China, predictions for 2020 show just how strong the market is. By next year, 11,500 tech start-ups are predicted to be in operation, 13 million people will be taking up co-working spaces and millennials, with their liking for collaborative spaces and additional life-enhancing services, will count for an even greater proportion of the workforce.
Regus are India’s largest flexible workspace operator, with WeWork and CoWrks – “India’s only large format coworking space provider’ hot on their heels. Another homegrown company, Awfis, have been raising investment in order to undertake aggressive expansion plans. As everywhere, demand has been fuelled by startup communities – boosted by the fact that in India 72% of founders are under 35 – and the realisation that shared amenities are more economically efficient. In cities like Bengaluru and Mumbai, traffic congestion is so severe that it’s also important for companies to find the kinds of convenient bases offered by flexible workspaces. In addition, India’s steady economic growth has clearly been a factor, with the market for co-working spaces doubling in 2017. The concept is expanding out from Delhi, Mumbai and Bangaluru to second tier cities like Chandigarh, Ahmedabad, Kochi, Indore, and Jaipur. IPSOS estimate that 57% of employees frequently work remotely and up to a third do so every day.
Of course, different countries have different challenges. In Japan, traditional workplace culture is distinctly inflexible, with an emphasis on strict hierarchies, long hours and always being present in the office. Interior designer Teruo Kurosaki founded Midori.so, one of the first co-working spaces in Japan. He commented ‘The concept of co-working in Japan has been difficult to develop because Japanese society does not hold freelancers in high regard…people are taught that working for a company is the most secure, low-risk and prestigious path’. However, with digital’s emphasis on innovation, collaboration and freedom of ideas, plus the stratospherically high cost of office space in cities like Tokyo, this is now starting to change. The Japanese government has even been actively encouraging remote working with ‘Teleworking day’, aware that for many people work-life balance is out of kilter. The country’s low birth-rate and aging population means that to fill jobs, it’s essential that people can work remotely in order to also look after elderly relatives. These factors are contributing to the recent rise in popularity of flexible workspaces in the country.
In these countries, plus others in the APAC region from Thailand to Indonesia, flexible workspaces will soon be transforming the lives of billions of people. Over the next few months and years, no doubt many providers will come and go, acquiring their rivals and being swallowed up in equal measure. But whatever happens, flexible workspaces may well become the norm in the future. Watch this (flexible) space…