In crowded Hong Kong, the co-working space industry has reached a critical mass, bringing in new trends to the business of providing affordable and flexible office spaces in the city.
The Hong Kong Economic Journal recently sat down with veterans from the sector – Wheelock Properties managing director Ricky Wong, Bloom co-founder Felix Mok, theDesk co-founder Thomas Hui, and ZEROZONE founder Roy Law – to discuss the latest trends and challenges in the business.
HKEJ: As a veteran in the real estate sector, what is your view on the booming co-working space sector in Hong Kong?
Wong: In the past, commercial property developers tend to look for long-term tenants for a steady and stable income stream. Contrary to the traditional practice, co-working space operators convert conventional office space into open floor-format office, and offer a flexible rental period and package, marketing itself as a location with access to the professional network.
Startups have been renting shared workplaces in consideration of their own development needs and cost control. On the other hand, multinational corporations like HSBC have also moved their digital departments to co-working spaces in order to expand their new digital business.
Looking ahead, I believe that there will be many large companies moving some of the field-work departments or new operations to shared workplaces. The demand for the Chinese and Hong Kong markets will become larger and larger. With the growing demand for co-working space from both Chinese and Hong Kong firms, Wheelock has leased 100,000 square feet of office area to shared workplace operators.
HKEJ: I have a question to the co-working space startup founders we have here. Why did you decide to start the business and enter this sector?
Hui: Over the years I have worked in the financial and consultancy sector, and then I came across the co-work concept and was fascinated by its huge prospects, so I started the business of theDesk.
Law: I was in Silicon Valley, after my instant messaging software startup TeamNote was acquired by the Y Combinator accelerator, and that’s where I found that there were always lots of entrepreneurs gathered in local coffee shops and restaurants, discussing and sharing ideas. So I brought the sharing culture back to Hong Kong and started a shared workshop.
HKEJ: As the shared office trend evolves, what do you think would be the next generation of co-working space?
Hui: First of all, to me, the first generation of co-working is that companies integrate life elements into the workplace, like equipping the office with table tennis tables, game consoles and other forms of entertainment, offering free beers and coffee. I think the next generation of co-working space would focus on building a community, rather than its interior design and facilities. We hope to create a space with a more inclusive community, where these professionals bring out the best that is in them, leading to business diversification.
Mok: For now, startups are the main customer base for co-working spaces. However, if the sector continues to expand, I am afraid there will be an oversupply in the market. I personally think the decentralization of large enterprises could be the biggest opportunity ahead for co-working spaces. In the past, large companies were all concentrated in Grade-A office buildings in CBDs such as Central. I expect them to spin off operations and locate themselves in different areas, allowing employees to work in neighboring co-working spaces.
Law: To me, Co-working 2.0 is the “sharing” model of business working. I want to bring the sharing element to the local community, enabling like-minded entrepreneurs to share their success and pain in their startup journey.
HKEJ: How do you manage your business to respond to the increasing competition in the domestic co-working space market?
Hui: There is a strong demand for shared workplaces in the market. However, the market competition has been fierce, and in fact, only a small number of operators can break even. We hope to share our company’s corporate philosophy, such as our ideas in financial management, with our peers, strengthening and enhancing the industry.
Mok: In the past ten years, the demand for flexible workplaces has kept growing, but perhaps in two to three years, the word “sharing” would become old-fashioned.
Law: We have not yet broken even. After all, the company’s goal is to build a community of entrepreneurs and startup founders. If I make a profit in the future, I will use that capital to invest in startups.
This article appeared in the Hong Kong Economic Journal on July 26
Translation by Julie Zhu
[Chinese version 中文版]
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