Jakarta-based co-working provider CEO Suite is opening a 27,000 square foot (2,508 square metre) office location in New World Development’s K11 Atelier in Tsim Sha Tsui, according to market sources who spoke with Mingtiandi, moving into a prime Hong Kong location abandoned by financially troubled mainland rival Kr Space.
The story of revolving serviced office locations marks the second time in one month that the frustrations of Kr Space have provided an opportunity for another operator. During the first week in May, IWG’s Spaces announced that it would soon be opening a 5,000 square metre facility near Shanghai’s Xintiandi that had been forfeited by its cash-strapped competitor.
The new facility in New World’s $2.6 billion Victoria Dockside project brings CEO Suite’s portfolio to 21 co-working centres across six countries, including Singapore, South Korea and Indonesia.
Paying Double for TST’s New Hotspot
Jakarta-based CEO Suite will be paying HK$2.97 million ($380,000) per month, or HK$110 per square foot for its new home, a rate which is nearly double Tsim Sha Tsui’s average grade A office rental rates of HK$62 per square foot per month during the first quarter of this year, according to figures from Colliers International.
The lease of the seventh floor in New World’s 435,156 square foot commercial tower marks the initial foothold in the Hong Kong market for 22-year-old CEO Suite, which has distributed its 21 locations across 11 cities in Asia Pacific.
The Jakarta-based co-working provider headed South Korean native Mee Kim has also partnered with New World for a location on the forty-seventh floor of Shanghai New World Tower on Central Huaihai Road, as well as in Beijing where it is leasing the tenth floor of the LG Twin Towers on Jianguomenwai Dajie.
Kr Space Stays in the Game
While CEO Suite’s new opportunity comes at Kr Space’s expense, the Beijing-based player is still fighting to stay in the ring.
Just two weeks ago the company announced that it had completed a RMB 1 billion ($145 million) round of funding, jointly led by IDG Capital, Gopher Asset Management and Hubei Yixing Capital.
The new financing, while marking Kr Space’s biggest fund-raising ever, could be needed to help settle disputes caused by the company’s failures in Hong Kong and mainland China.
In April, Hong Kong-listed developer Chinachem opened a lawsuit against Kr Space for HK$500 million ($63.8 million), accusing the mainland co-working space provider of breaking a five-year lease contract on an 83,000 square foot (7,712 square meter) lease in its One Hennessy office building.
The company, which once talked of its plans to surpass WeWork in China, was reported in February to be closing down six “money losing” mainland locations spanning 30,000 square meters as it underwent a “business adjustment”.
Co-Working Providers Keep Leasing in Hong Kong
Despite Kr Space’s struggles, shared office operators have continued to take big new leases in the world’s most expensive office market in 2019.
Last week, WeWork was said to have taken a 100,000 square foot space at Henderson Land’s H Code on Pottinger Street in Central at a rate of HK$55 per square foot. That lease in the city’s primary business hub came less than two months after the $40-some billion provider leased six floors, spanning 150,000 square feet in Wharf’s Harbour City complex in Tsim Sha Tsui for HK$60 per square foot.
Australian flexible office provider Victory Offices has also recently taken up a 25,000 square foot high floor at The Center on Queen’s Road in Central for HK$100 per square foot. Earlier this week, home-grown Hong Kong co-working operator theDesk announced that it is teaming up with Sunlight REIT to open its fifth location in the city at 50 Bonham Strand in Sheung Wan.