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Hong Kong property developers expand into co-working sector as demand for proper offices dwindles

  • All big companies are rethinking their space usage, with one eye on minimising costs, says Wendy Lam of Eaton Club
  • Small companies looking to remain flexible and avoid upfront capex, will view serviced offices as an option: Cushman

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Wendy Lam, head of Eaton Club, a subsidiary of Great Eagle Holdings, at the company’s co-working space in Wan Chai. Photo: Dickson Lee
Lam Ka-sing

Hong Kong’s property developers are expanding to the co-working sector amid dwindling demand for proper offices, even though some major operators have surrendered office space or exited the city altogether.

“The serviced offices sector continues to evolve as landlords are now entering the market in direct competition with established players,” said Keith Hemshall, Cushman & Wakefield’s executive director and head of office services in Hong Kong. This is because small companies “will continue to consider serviced offices as an option to maintain flexibility and avoid upfront capex”, he added.

The number of operators in the city has dipped slightly from around 15 during a market peak in mid-2018 to 13 now, while the number of centres has dropped from 39 in 2018 to 34 now, according to Knight Frank.

US operator WeWork surrendered office spaces at locations such as the Harbour City complex in Tsim Sha Tsui, Hysan Place in Causeway Bay and Hopewell Centre in Wan Chai, while Chinese operator KrSpace exited Hong Kong, surrendering its space in Times Square.

All big companies are rethinking their space usage, with one eye on minimising costs, said Wendy Lam, the head of Eaton Club, a co-working space subsidiary of Hong Kong property developer Great Eagle Holdings. These companies are adopting a “core-and-flex” strategy, with their core teams located in offices around Hong Kong’s Central district and others working from flexible workspaces, an approach that is more flexible and helps reduce capital expenditure.

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The current economic climate suits the flexible workspace industry. “A lot of landlords are thinking about [expanding into the co-working industry]. It is possible they may open their own centres, because this model works,” Lam said, adding that demand will increase.

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