Coworking space needs no introduction in Singapore.  From big international players like WeWork from California to home-grown big boys like Justco to smaller setups sprouting up all over Singapore, it is taking over office rentals by storm.  But is this growth sustainable and the trend here to stay?

In this article, we will summarize the key advantages and negatives of both as there are businesses that still prefer the merits of a traditional office:

Coworking Space
  • Flexibility in terms of length of lease and incremental spaces as a business expands
  • No need to worry about office renovation and ongoing repairs and maintenance
  • No need to worry about general office management & services like meeting room bookings, wifi connection, utilities, drinking water, etc.
  • Opportunities to network across companies and industries
  • Working in a hip, open and fun environment that fosters creativity and where work becomes play
  • Lack of privacy for business operations with communal setup
  • Lack of privacy also relates to the constant distractions with need to network and small talk.
  • Lack of exclusivity and branding factor when clients or business partners come down for meetings
  • Paying a perceived higher psf compared to traditional office rental
Traditional Office
  • Design of office space entirely for one company’s operational needs
  • Strong branding and exclusive factor where clients/business partners perceive the business to be sustainable in paying rental for whole office
  • Full privacy with no risk of information leaks to external parties in the same office
  • Paying a lower psf rent based purely on area of lease not including the frills
  • Need to commit to minimum of 2 years or even 3 years for commercial lease and to make the renovation costs “worth the while”
  • Renovation costs often translate to a higher amortization figure per month, especially for smaller space where there is no “economies of scale” or savings in renovation projects
  • Need to pay for and manage all ongoing office services from wifi, utilities, telephony system, drinking water to cleaning etc. and very often a need to commit to contractual periods for certain services

We see more office landlords having a harder time filling up empty spaces compared to 5 years ago.  Indeed, the flexibility of coworking spaces attact even multi-nationals (MNCs) these days when setting up sales offices in a new market, as no longer do they need to commit themselves into a lease yet they retain the ability to attract talent in global markets with a big swanky offices.  Therefore it comes as no surprise that commercial building owners including REITS and listed developers have started their own coworking concepts to fill up floors which might otherwise be vacant for quite a while as the entire work space goes through some kind of structural shift in the coming years.

However, we do believe that there is still a market for traditional office rentals even as the coworking trends take root in Singapore over the next few years.  For all the reasons we have highlighted in our analysis earlier (table above), we know there are still many mid-sized companies who believe in having a stronger brand prescence in a fully-owned office for their business.  They see it as a necessary investment especially when they grow to a certain size in business operations or attain certain staff strength where economies of scale justify investing in office overheads.

With the exception of MNCs who tend to swoop in on coworking spaces or serviced office in a big way like taking up half of the available private rooms in any new centre, but often only for a transient period before they finalize their operational requirements or awaiting renovation for their new final offices, tenants in coworking centre tend to be smaller setups with less than 10 staff.  This is where it makes a good fit for a tenant company to save on office resources and renovation costs via a coworking space operator.

At StartWise, we offer what we believe is a great “middle-of-the-road” proposition for such smaller businesses where one can have the cake and also eat it.

What do we mean?  Well, StartWise offers what most coworking operators would offer – private office suites (with window) as well as dedicated work desks.  Yet, because we are not the size of big coworking operators with too many rooms and tables to fill, tenants get the exclusivity factor in operations as well as the option to put up their corporate logo at the office reception, thus giving that proprietary branding needed.  Essentially we are like a group of related companies or sister companies who choose to co-locate their offices for cost efficiency.

Contact us for a no-obligations viewing if you like to explore taking up spaces with us and join the StartWise family.

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