Hong Kong’s shared office spaces are getting more innovative
Providers of co-working spaces in Hong Kong are branching out from traditional office buildings into street-level shops and hotels as their popularity grows among companies seeking cheaper, more flexible leasing terms in one of the world’s most expensive cities.
The rapid shift of shared working spaces into unconventional premises comes as operators aim to broaden their base of clients who are looking for creative working environments.
Garage Society, a co-working space operator for entrepreneurs and professionals, added its latest property by integrating four shops in Sai Ying Pun into a 7,000 square foot hub.
“The four shops were previously used as a storage area for coffee and tea leaves,” said founder Elaine Tsung.
It is the firm’s third co-working hub after ones in Central and Sheung Wan located in commercial buildings and used by clients such as hedge funds.
“In Sai Ying Pun, the majority of our clients are start-ups or freelancers,” said Tsung. “But one company, which develops interactive mirrors for retailers, has eight people who are frequently flying and they choose us for convenience and because they like the working environment,” she said.
Tsung has spent about HK$5 million converting the premises into a round-the-clock working hub with monthly rates of HK$4,000.
It consists of hot desks, meeting rooms, an in-house coffee shop and a rest area. Garage Society managed to sign an eight-year contract with the landlords.
“Part of the premises can also be used for pop-up stores for product display,” she said. “It is also good for organising events such as concerts at the weekend.”
Singapore based co-working operator Next Story Group is taking a different approach.
It has rented 7,000 square feet on the second floor of the newly opened Kerry Hotel in Hung Hom as its first hub, named Kafnu Hong Kong, which charges about US$10 per hour.
It will have two rooms where users can take a nap or spend the night if they work late.
Kafnu Hong Kong consists of 70 desks in the form of 24 big tables shared by clients, on the second floor of the Kerry Hotel.
“The rise of the sharing economy in the last six years is really fundamentally changing the landscape of accommodation, transportation and even the way people work and learn,” said Morris Sim, chief marketing officer of Next Story Group
Its members are entitled to use recreational facilities such as the gym at a discounted price at the Kerry Hotel, a brand under Shangri-la hotel group.
“With a concept like this, you cannot do it just for the rental – it’s about building a community and creating a network. It is not possible to do it in a isolated manner,” he said.
Inside the Kafnu Hong Kong there will be a whisky bar for entertaining guests or meeting with business clients, he said.
While some providers are opting for unconventional premises, property consultants said renting office spaces remains co-work companies’ first choice.
JLL said it has seen an unprecedented amount of take-up from the co-working sector, from both new entrants and traditional occupiers.
“In a market where net demand growth has been thin, the arrival of co-working space operators represents a welcome source of new demand for the office leasing market,” said Paul Yien, regional director of Hong Kong Markets at JLL.
The growing popularity of co-working offices in Hong Kong is not only being driven by start-ups but also increasingly by larger companies looking to better utilise their real estate within the city; often that means taking advantage of the greater flexibility, convenience and savings shared space can offer.
HSBC in September last year announced it has rented more than 300 hot desks in a grade A office building in Causeway Bay to house its digital and transformation teams.
The bank took out membership at WeWork’s Tower 535 on Jaffe Road, according to the US-based co-working office provider.
The average annual rent for prime office space in Hong Kong is US$112 per square foot, higher than the US$86 per square foot in London’s city centre and US$82 per square foot in midtown New York, according to Colliers International.
About 64 per cent of multi-national corporate occupiers plan to use some form of third-party office space, including co-working space, by 2020, according to CBRE Research’s Asia Pacific 2017 Occupier Survey.
In Hong Kong, co-working space operators, as well as serviced offices with co-working elements, currently occupy 960,000 sq ft of office space, the survey said.
In the first half of the year, they secured about 222,000 sq ft of new office supply, 35 per cent of which was categorised as grade A.
The total footprint of the co-working sector will increase by 136 per cent to more than 1.18 million sq ft by the end of this year from 2013, said CBRE.
“By leasing co-working space, multinational corporations can save a significant amount of capital expenditure for new office fit out and take advantage of flexible lease terms,” said Dane Moodie, director of advisory and transaction services for offices at CBRE Hong Kong.