Coworking Industry

Industry Research

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Table of Contents

1 What is Coworking?

2 Positives and Negatives (Users/Landlord Perspective)

3 Financial Economies of Coworking Spaces

4 Market Size and Growth

5 Key Trends in the Coworking Industry

6 Appendix: Property Players who have Ventured into Coworking

Appendix: Comparison Table of Selected Singapore Coworking

7
Operators

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What is Coworking?

Definition:
Coworking Model

A flexible, membership-based, community-oriented, sub-leasing model that focuses on

creating space which supports collaboration, openness, knowledge sharing, innovation and
user experience.

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Positive and Negatives of using a Coworking Space (User Perspective)
Security and privacy remains the main disadvantage of coworking spaces

Positives Negatives

Cost Savings Security and Privacy

Up to 18% - 26% in savings1 from Higher risks of loss/theft of
reduced maintenance and intellectual property, sensitive
administrative cost information, or physical property
due to the nature of open offices
and the natural churn of members
Innovation-Friendly
Open-design of working spaces
encourage communication and
cross-pollination of ideas

Supportive Business Network

Frequent community/networking
events builds up the community

(1) FlySpaces

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Positives and Negatives of renting to coworking operators (Landlords Perspective.)
Lack of control over final tenant mix and security is the main disadvantage of renting to coworking operators

Positives Negatives

Improve Occupancy Rate Tenant Mix/Lack of Control over

Another source of demand end Users
Coworking operators aggregate Landlords lose control over their
smaller demand for space into a tenant mix, which might have
more sizable demand for space negative effect on existing tenants.
(e.g. too casually dressed)

Improve Branding/Image of Security Issues

Property Increased churn of people walking
Increasingly seen as a throughout the building presents
prestigious tenant due to it being increased security risks
associated with innovation
An amenity for other tenants

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 Financial Economics of Coworking Spaces
Renting of desks make up only 40-46% of coworking space operators revenue

Property Owner/Landlord
Mostly fixed long term lease
Revenue
Stream
Moving towards, revenue/profit sharing model with Coworking Space
Operators (higher upside, higher downside)

Coworking Space Operator

Revenue/ Key
Expense Metric
Streams
Revenue per square
foot (RPSF)

Source: Desk Mag

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 Users of Coworking Spaces
Coworking space has become increasingly accepted by established corporations

Initially Today
Early Adopters Only Early Adopters + Mainstream Companies
Creatives According to WeWork:
Freelances 14 percent of its 80,000 members
Solopreneurs are employed by a company with
Startups (especially tech) 500 or more employees. The list
includes Dell Inc., McKinsey & Co.
and Salesforce.com Inc. Of the
world's 500 most valuable companies,
52 have employees working out of a
WeWork.

According to Serendipity Labs:

corporate employees make up 45
Main reasons why corporates are using percent of members at its two U.S.
coworking spaces: locations, including workers from
Temporary house project teams PepsiCo, Microsoft, and Heineken
Seek to foster collaboration and an
entrepreneurial culture
Seek business opportunities from the
other smaller members
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Coworking Industry - Global
Historical growth of number and members of coworking spaces is 51% CAGR and 73% CAGR respectively

Number of Coworking Spaces Number of Members

16,000 90% 1,400,000 120%

13,800 80% 1,180,000
14,000 1,200,000 100%
12,000 11,300 70%
1,000,000
60% 835,000 80%
10,000
50% 800,000
8,000 60%
40% 600,000
6,000
30% 40%
400,000
4,000 20%
200,000 20%
2,000 1,130 10%
43,000
- 0% - 0%

No. of Spaces Growth Rate No. of Members Growth Rate

Both the number of coworking spaces and the number of members using coworking
spaces have been experiencing tremendous historical growth in the past (51% CAGR and
73% CAGR respectively)
Source: Desk Mag

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Key Trends in Coworking Industry - #1
The average number of members per coworking space is increasing

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Key Trends in Coworking Industry - #2
Coworking spaces are expanding even though they may be unprofitable

The rapid expansion of coworking spaces may lead to situations of localized oversupply

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Key Trends in Coworking Industry - #3
Coworking members, once acquired, are quite sticky

The stickiness of coworking members is one reason why coworking spaces are expanding even
though currently unprofitable

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Coworking Space in South East Asia
Brokers estimate that 10-15% of office stock in SEA will be occupied by coworking operators by 2030

Key Points

Short-term collaborative workspace

solution is growing at staggering rates
per annum, and Cushman & Wakefield
project that it will occupy 15% of total
office supply in Southeast Asia by
2030. JLL on the other hand forecasts
10-15% of office stock by 2030.

A lot of the growth of coworking spaces

in South East Asia is attributed to
freelancers. There are 10 million
freelancers in Southeast Asia, and are
projected to make up 40% of the
workforce by 2020

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Appendix: Property Developers who have ventured into Coworking Not exhaustive

Property companies either JV with coworking operators or launch their own brand

JV
Capitaland has a JV with Collective Works to launch Collective Works
Capitol Tower a 22,000 square feet space at level 12 of Capitol
Tower. This was the first coworking space in a Grade A CBD building
in Singapore
Keppel has their own coworking space at Keppel Towers that
measures 6,400 square feet in size.

CDL invested SGD 14.8mln for 24% stake in Distrii, an operator of

JV coworking spaces in China. Distrii will lease 60,000 square feet of
space at CDL's Republic Plaza Tower 1, a prime Grade A office
building connected to the Raffles Place MRT Station.

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 Appendix: Coworking Spaces in Singapore Not exhaustive

Collective Workspace JustCo The Hub The Working Space Mob

Works Capitol

Number of 2 1 4 2 2 1
locations
Cheapest From 240 From 350 From 98 From 345 From 255 From 375
Hot Desk (40 hours of (Unlimited) (1 day hot (80 hours of (10 days of hot (unlimited)
Membership hot desk desk usage) hot desk desk usage)
usage) usage)
Dedicated From 700 From 500 From 750 From 770 From 729 From 580s
Desk
Private Room From 1,600 From 1,300 From 800 N.A. From 900 N.A.
Membership
International No, only SG No , only SG No, only SG No, only SG No, only SG No, only SG
chain?
Real Estate Capitaland Owned by
Partners? (50:50 JV for Keppel Land Around 40 coworking spaces in SG. 80% outside
Collective CBD
Works Capital
Tower) Prices are in SGD a month

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contents.