Concrete Analysis | Hong Kong landlords turning into co-working space operators a trend to watch in post-coronavirus era
- A situation of oversupply coupled with intense competition has been exacerbated by US-China trade tensions, social unrest in Hong Kong and the Covid-19 pandemic
- Landlords could be best placed to exploit the next wave of co-working space growth, when business activity resumes to normal levels
Co-working spaces have proliferated in Hong Kong over the past decade. Major operators, such as WeWork, KR Space and IWG, have actively expanded in the city, with many taking up large floor spaces in core districts.
These co-working space operators have taken up the opportunity to serve the growing market of start-ups, freelancers and small businesses, who appreciate more flexible commercial terms and require a smaller footprint.
However, the industry has been facing a down cycle in recent years, which can mainly be attributed to overexpansion and, in some cases, mismanagement. Aggressive growth – typically driven by hunger for company valuations rather than actual demand – motivated many operators to sign long-term leases at unprecedented prices.