Hong Kong’s co-working sector is on track to stabilise and recover after a period of rapid expansion and will be well supported by the shift to remote working, industry observers say.
The co-working industry in Hong Kong is getting better now after adjustments made in the last few quarters, said Patrick Mak, executive director at Knight Frank.
“Previously many operators were in overexpansion mode, but then the market adjusted and many closed down and disappeared, creating a new balance point between supply and demand,” said Mak. “We think it will stabilise again towards year-end.”
The shared office space sector in Hong Kong saw high levels of growth between 2016 and 2018 when several operators announced expansion plans only to beat a hasty retreat after the economic downturn spurred by the social unrest in 2019 and the coronavirus pandemic sapped demand.
WeWork, the New York-based shared office provider, has reduced its Hong Kong footprint by half, after giving up 90,000 sq ft of space spread over eight floors in Tower 535 in Causeway Bay. The closure of the flex office was largely related to HSBC, which decided to relocate its business division from the WeWork space to their own building in Central, according to Savills.
However, some flexible workplace operators, such as IWG, were expanding on the back of their global partnership with Standard Chartered. The bank’s 6,000 employees in Hong Kong can work at any of IWG’s offices after the lender implemented a flexible working arrangement last year.
Another co-working operator, theDesk, said that all its seven locations in the city had high occupancy. Following a 65 per cent growth in membership last year, the company is “seeing a continuing growth trend” this year, said Paul Johnson, its chief commercial officer.
Separately, a survey by a UK-based company in May found that Hong Kong had the third most number of co-working spaces in the world after London and New York. Hong Kong had 166 co-working spaces, behind 313 in London and 229 in New York, according to the survey by CircleLoop, which operates a cloud-based business phone system.
“No one can deny that the 2020 pandemic has had a lasting impact on the way that companies work for good,” CircleLoop said. “As part of remote working, completing your workday from co-working spaces is a concept that businesses are taking advantage of more than ever before.”
The pandemic has been a game changer, creating instant disruption to the traditional workplace culture, while workers and companies adapt to the change, theDesk’s Johnson said.
With the remote working trend and decentralisation of workforce being implemented by multinational companies, the co-working industry is here to stay, he added.