Co-working spaces continue to grow in popularity as both startups companies and traditional businesses require greater flexibility. This, along with advances in technology that have improved communication and collaboration, has helped co-working spaces rise to prominence.
This trend has begun to make inroads in the Asia-Pacific region including Bangkok where places like The Hive and Hubba continue to grow in popularity. However, the trend is still relatively new and it remains to be seen just what effect it will have on the office market as a whole.
“It is undeniable that co-working space is a new rising trend in the Bangkok office market,” Nithpat Tongpun, head of office services, CBRE Thailand, said. “However, it is necessary that co-working operators in Bangkok truly understand the demand level, all associated costs and investment returns so that they have a clear picture of the market as the competition in co-working space has been increasing.”
CBRE’s latest Viewpoint, The Rise of Co-working Space in Asia Pacific: Boon or Bane?, noted that there are nearly 200 co-working spaces in the Asia Pacific region. Most of these are located in gateway cities such as Hong Kong, Singapore, Shanghai, Tokyo, Sydney and Melbourne. And while local and regional co-working space operators are the most prevalent in Asia Pacific with a market share of 60 percent, several international players could soon expand into the region.
“Competition among co-working space operators is intensifying as they open more centers, lease larger spaces and increase their presence in prime areas. This will increase real estate occupancy costs and squeeze profit margins,” Dr. Henry Chin, head of research, CBRE Asia Pacific, explained. “Co-working space operators need to plan expansion carefully, keep costs in check and be aware of this increasing competition—as well as conducting thorough assessments of supply and demand dynamics.”
Despite the growing popularity of co-working spaces, the CBRE report noted that they don’t really pose much of a threat to current office space rentals at the moment. Dr. Chin pointed out that it does have an implication for landlords who now must consider whether to lease space to co-working operators or develop their own co-working space.
