Singapore-headquartered co-working provider JustCo announced plans this week to double its APAC footprint in the first few months of this year by opening or securing nine new centres in Australia, East and Southeast Asia.
At the centre of the GIC-backed company’s 2019 program is a plan to open a 90,000 square foot (8,631 square metre) facility on William Street in Melbourne — among four Aussie openings planned for the first half of this year and its first steps outside of Asia.
The company, which currently enrolls close to 17,000 members, says it will secure or open nine new centers in the region by the end of this quarter, expanding its portfolio to 29 locations.
Expanding into Australia and Korea
In addition to the William Street facility, another five of the company’s latest slate of locations will be in Seoul, Sydney, and Melbourne. The firm will also continue to expand its presence in Singapore, Shanghai, Bangkok, and Jakarta during the period.
“2019 is starting strong for us as we enter new cities in Korea and Australia and announce more locations in Hong Kong, Taiwan, Vietnam, Malaysia, and the Philippines,” said founder and CEO Kong Wan Sing.
The co-working operator’s announcement come nine months after Justco had revealed plans in May last year to open 50 centers in Asia by 2019, and 100 centers by 2020, as well as to acquire tech companies to complement its real estate operations.
JustCo’s member base climbed 42 percent last year, Kong pointed out. This quarter, the company’s headcount will grow by 60 percent in order to accommodate the expansion, according to a statement released this week.
Bigger Centres and More Services
The company has steadily shifted towards larger locations, which Kong said is a key part of its competitive advantage.
The new locations received 50 percent pre-lease commitment by large companies, he added. Last year, 60-70 percent of the company’s clients were corporates, according to a statement by Kong, referenced by the Financial Times.
A growing portion of the Singaporean firm’s revenue has begun to come from management contracts. In July of last year, JustCo announced a deal to operate half of Verizon’s 20,000 square foot office in Singapore. This year it announced it would manage GuocoLand’s three-level 16,000 square foot space at 20 Collyer Quay in Singapore, which is set to open in April of this year.
Investors Double as Landlords
Last year, the firm received a $177 million capital injection from Singapore’s sovereign wealth fund GIC and Singapore-listed developer Frasers Property, which is controlled by Charoen Sirivadhanabhakdi, the billionaire chairman of Bangkok-based alcohol giant Thai Bev. The investment, which gives JustCo access to properties owned by the two firms, has helped the flexible office firm to secure prime locations.
The co-working space will open its first Korea location at GIC-owned Seoul Finance Center. In the fourth quarter, the company will open a center in Singapore’s China Square Central, owned by Frasers.
In Thailand, JustCo brokered similar agreements with developers TICO and Sansiri, which purchased a six percent stake in the co-working firm last year, valuing it at $200 million. In Indonesia, it partners with diversified conglomerate Gunung Sewu.
JustCo will face stiff competition in Australia from WeWork (which operates 16 facilities in the country) and local providers Hub Australia and WorkClub also plan to expand in 2019.
Flexible office space in Southeast Asia, including co-working and flexible offices, increased at a compound annual growth rate of 40 percent over the past three years in terms of area — faster than in Europe (21.6 percent), and the United States (25.7 percent).
Flexible offices now account for approximately 2 percent of office space in the region, up from 0.5-1 percent in 2015, according to a November 2018 report by real estate consultancy JLL.