China’s economy grew by 6.3 percent in the second quarter, compared to a year earlier, showing that the country is on track for recovery, although with challenges still remaining, many companies have adopted a “wait-and-see” approach to big decisions, such as signing long-term office leases.
That caution on the part of large corporate occupiers is showing up in office occupancy, even in central Shanghai, where vacancy for grade A spaces rose into double-digits by the end of June, with grade A properties in de-centralised locations averaging nearly 24 percent vacancy, according to figures from property consultancy Colliers.
Facing these changes in occupier demand, more landlords are turning to flexible office strategies to help their properties gain a competitive edge, and partnerships with professional flexible office providers are increasingly favoured as guaranteeing top quality facilities in line with the expectations of local, regional and international giants.
In the midst of 2023’s challenges, IWG, the world’s largest flexible office operator, with more than 3,500 locations globally, has been adding to its partnerships in China, including branching out into cooperations with a leading hotel operator in a deal signed in July.
Ready for a Rebound
With China’s government rolling out new policies this year to foster a post-pandemic economic recovery, IWG has been working with some of China’s most reputable corporations to establish new flexible office locations, including signing an agreement in July for a new location in Shanghai.
In the July deal, IWG agreed to cooperate with Western Group, an enterprise under the government of Shanghai’s Putuo district, to establish a management partnership to expand IWG’s Yangtze River Delta business and meet further demand for flexible office space in the economic region through opening a new Regus Center in Putuo district. The agreement brings IWG’s centres in Shanghai to nearly 30.
The new location at the Changfeng Center will span more than 2,330 square metres at the top of the LEED Gold certified building within a 10-minute walk of Shanghai’s Metro lines 13 and 15. With Western Group currently managing or developing over 3.25 million square metres of gross floor area across 31 projects, the two companies look forward to future opportunities to cooperate.
Speaking at the signing ceremony, Jiang Lei, party secretary and chairman of Western Group said that cooperating with IWG is not only an effective way for enterprises to optimise their resource allocations, but also an inevitable requirement to adapt to changing times, according to local news reports.
In addition to the July opening in Shanghai, during June IWG celebrated the debut of its HQ flexible office brand in southern China through an agreement with Shanjing in the Cloud tech park, a more than 100,000-square-metre development in Guangzhou’s Panyu district.
Positioned to be accessible to startups and fast-growing companies, HQ provides the professional management which have made Regus and Spaces the world’s leading flexible office brands, with the Panyu project supporting the dynamic tech industry in the district.
As businesses of all sizes compete to attract and retain exceptional talent, while also looking to operate in a more dynamic and cost-effective manner, more are adopting flexible working, Paul MacAndrew, general manager for the Greater Bay Area at IWG said on the occasion of the signing. IWG Group’s hybrid office solutions have been proven to improve business efficiency and significantly reduce costs for fast-growing companies, he added.
Enhanced Hotels and Resorts
With businesses in more than 120 countries and regions around the world, and with 83 percent of the world’s largest companies having chosen to work with IWG, owners of all types of properties are seeing advantages to incorporating flexible work spaces in their projects, as illustrated in a July agreement involving one of China’s largest hotel developers and operators.
In the July deal IWG agreed to cooperate with Wanda Hotels and Resorts on a plan to set up 50 flexible office facilities in the company’s projects within the next three years.
Incorporating a flexible office facility into a hotel provides professional working environments for guests and allows them to accomplish key tasks even when vacationing at a five-star resort or while traveling on business. The office facility will also allow hotel operators to make more efficient use of the space in their buildings and earn additional revenue.
Edward Hu, president of IWG Group China explained at the time that IWG signed its cooperation agreement with Wanda Hotels and Resorts, that some hotel operators are choosing to convert an entire floor of their property for use as flexible office space, which makes the property more attractive to guests at the same time that it provides an additional revenue stream.
While some flexible office operators have struggled after adopting unrealistic business plans, IWG has been growing steadily for nearly 34 years and achieved record revenues in the first half of 2023. In Asia, this growth has been seen not only in IWG’s China business, but also in key hubs like Singapore, where the company opened its 25th location in the city-state during August.
During the current quarter, IWG has signed new partnership deals across Europe, the Americas and Africa, in addition to Asia, and is committed to working with China’s finest companies to boost productivity and build lasting partnerships.
Contact the IWG team to find out more about how your company can cooperate with IWG.