Hong Kong co-working space concept looks to hotel industry for inspiration in pricing
Office space landlord The Work Project uses an innovative pricing model where desk rates fluctuate in a system akin to hotel bookings
Hong Kong’s latest co-working space, The Work Project, wants to set itself apart from rivals such as WeWork by modelling itself after the hotel industry, allowing tenants to book private offices and hot desks online instantly.
The Work Project founder Junny Lee said that the company aims to become the “Expedia for offices”, whereby small businesses and start-ups in Hong Kong which are interested in leasing hot desks or a private office can go on to The Work Project’s online booking platform to check out available spaces and pricing before making an instant booking.
“The world has moved on but office leasing remains in the Stone Age ... it has remain unchanged for decades,” said Lee. “If you go online and search for office space, there is a complete lack of transparency. There is no information on pricing or inventory.”
Situated in Causeway Bay, The Work Project occupies four floors in Midtown Soundwill Plaza 2. The space boasts 74 private offices that can hold between two and 12 employees, as well as 80 hot desks.
The entire office space can accommodate more than 300 people, according to Lee. Offices and desks can be booked on a monthly or daily basis, according to the tenant’s needs.
“We don’t want to be just another co-working space,” Lee added. “We want to help companies lower the monthly committed rent [per employee].”
According to Lee, the average rent paid by companies per employee in Hong Kong is approximately HK$8,000 to HK$10,000 a month, due to the high costs involved in inflexible office leases and having to fit out the office.
However, Lee claims that the average rent per employee can go to as low as HK$6,600 per month for 10 employees with The Work Project, based on a combination of a six-person office and four hot desks.
Lee said he picked Hong Kong as the first city for The Work Project as office leases in the city are among the most expensive in the world, and he hopes that the company can help to make office leasing more flexible as companies can “adapt [office space] as they grow or downsize”.
According to Knight Frank’s Skyscraper Index released last week, Hong Kong topped the list of 31 cities around the world, with prime office space leasing for an average of US$278.5 per square foot per annum. Rates in Hong Kong are 76 per cent higher than runner up Manhattan, New York, where prices averaged US$158 per square foot per annum.
The Work Project’s office leasing rates start from HK$13,905 for a private office for two, compared to Work’s listed starting rates of HK$14,800.
However, similar to the hospitality industry, The Work Project’s rates may fluctuate month to month depending on the demand for offices, it said.
The company has also adapted personal touches found only in luxury hotels to its office space.
The private offices are outfitted with adjustable desks that transform into standing desks at a touch of a button, accompanied by high-end office chairs. The pantry also stocks custom-made tea and the office plays a tailored music playlist developed in conjunction with music consultancy Audio Couture to help people focus in the office.
The Work Project will open another office-leasing space in Singapore next May, according to Lee, who said that he plans to go global and “revolutionise office leasing” with the concept. Over US$3 million was invested into The Work Project in Hong Kong.
However, the rise in the number of co-working spaces in Hong Kong such as The Work Project and WeWork could lead to reduced profit margins.
“Competition among co-working space operators is intensifying as they open more centres, lease larger spaces and increase their presence in prime areas. This will increase real estate occupancy costs and squeeze profit margins,” said Rhodri James, executive director advisory and transactions services for office at CBRE Hong Kong said.
As of the end of 2015, there are about 40 co-working space operators in Hong Kong, he said.
“The bigger players in the market take up around 250,000 square feet of co-working space currently,” he said.
Unlike most Asia-Pacific gateway cities, where around 70 per cent of co-working spaces are in fringe or decentralised areas with lower rents, more than 50 per cent of co-working spaces in Hong Kong are situated in prime areas, with the majority located in older office buildings, James added.
Last week, HSBC rented over 300 hot desks at WeWork’s Tower 535 space on Jaffe Road, making it the largest corporate membership subscription for a co-working space in Hong Kong thus far.
Additional reporting by Sandy Li
This story has been amended to correct a figure relating to The Work Project’s monthly rate for a two-person office. The monthly rates begin from HK$13,905, according to updated data provided by the company.