The View | Cutthroat competition in China’s co-working office sector will see a survival of the largest
- The fact China’s largest home-grown provider of shared workspace, Ucommune, succeeded in winning fresh backing amid a funding crunch is yet another sign that consolidation is under way and more of the smaller players are set to fail
Pioneered by start-ups, entrepreneurs and freelancers, co-working – workspaces in which individuals or people from different companies share the same space, encouraging collaboration and fostering innovation – is transforming commercial real estate as companies utilise shared office space as a complement to their existing traditional portfolio.
In mainland China’s office market, co-working is among the fastest growing sectors in terms of space absorption. Morgan Stanley notes that in Shanghai – which, along with Beijing, is the main battleground for co-working operators, with both cities accounting for roughly two-thirds of co-working centres in China – co-working spaces constituted more than 15 per cent of office take-up in the first three-quarters of last year, on a par with Central London and higher than in New York.
One of the main drivers of demand for communal workspace arrangements is the very high occupancy costs for prime office space in China. According to the latest Premium Office Rent Tracker, published by property adviser Jones Lang LaSalle last December, five of the top 11 priciest office markets globally are in China, including Hong Kong.