Co-working provider Spaces is opening five new locations in Singapore by the end of next year, taking its holdings in the country from a single site to half of a dozen shared office centres as rising rents and changing work cultures fuel a flexible office boom in the Southeast Asia business hub.
The company, owned by Regus-parent IWG, will be adding an estimated 234,000 square feet (22,000 square metres) to its local portfolio, up from 26,000 square feet. Spaces Robinson, the first of the new locations, has already been opened.
Spaces announced the 5-property expansion in a press release dated 29 June 2018, adding to its 163 sites globally, of which five are located in ASEAN nations.
Opportunity Seen in Singapore
In addition to the centre at 140 Robinson Road near McCallum Street, the company is adding: a new 35,000 square foot flagship centre at One Raffles Place, slated for early 2019; 30,000 square feet at TripleOne Somerset (mid 2019); a Clarke Quay location (end 2019); and 50,000 square feet at Paya Lebar Quarter (PLQ) (end 2019). Spaces opened its first site in the country, at City Hall, in 2016.
“Singapore is an international hub for businesses and is one the most vibrant markets in the world,” says Martijn Roordink, co-founder of Spaces. “It is a perfect fit with Spaces’ culture of expanding networks and connecting like-minded members to link up and share ideas.”
IWG is the world’s largest serviced office provider. It purchased Spaces, a Dutch company, in 2015, and in addition to Spaces and Regus owns No18, Basepoint, Open Office and Signature. The company has been the subject of numerous takeover offers in recent months.
Taking Over 20% of the Market in Two Years
According to JLL, the flexible workspace market in Singapore grew 35.7 percent CAGR 2014-2017, faster than in many other major markets, while flexible space penetration is about 2.8 percent. The real estate firm adds that flexible space run by major operators in Singapore totalled 900,000 square feet at the end of 2017, up from 500,000 square feet at the end of 2014. Including all operators, the market may be as large as 2.1 million square feet.
Colliers forecasts that flexible space could total 20 percent of all office space in Singapore by 2020.
Co-Working Players Compete for SG Space
With Singapore’s Southeast Asia-leading office rental rates having risen an average of three percent in the first quarter, according to figures from JLL, the city-state has become a key battlefield for regional and international operators of flexible office space.
WeWork, which is the largest co-working company globally and in the midst of a $500 million Asia expansion, acquired Singapore’s Spacemob in 2017 and opened its first location in the country, 38,000 square feet at Beach Centre, late the same year. The company now has four sites in Singapore, including 40,000 square feet at Marina Square and 30,000 square feet at 71 Robinson Rd.
Other challengers are quickly adding space — often with the support of some of the world’s largest investors. Local player Justco received $177 million in investment from GIC and Frasers Property earlier this year, while Singapore development heavyweight CDL joined with Shanghai-based Distrii to kick off a Southeast Asia expansion drive for the tech-driven flexible office provider in Singapore during May.
Official support for flexible office strategies is also evident in Singapore. The government is sponsoring LaunchPad, which includes a co-working space, while Temasek Holdings-backed CapitaLand formed a 50-50 joint venture with Collective Works in 2017.
Rising Rents Fuel Flexible Office Expansion
With rents for grade A space averaging S$9.51 per square foot per month at the end of March, according to JLL, tenants are likely to continue to look for flexible space as an alternative to long-term leases of whole floors.
As leasing prices have now risen for more than four consecutive quarters and supply of new projects limited, the rising cost of rentals should continue to incentivise serviced office players hoping to capture more of Singapore’s growing flexible space market.