Why is serviced office considered the new normal in Hong Kong for SMEs?

The Hong Kong office leasing market is evolving. How a city like Hong Kong, which has a strong traditional office culture, is aggressively leaning towards serviced office with flexible lease provided by The Executive Centre, WeWork, Regus and other operators?

Serviced office - private office
The Executive Centre office in The Hong Kong Club Building

Serviced Offices (also called Co-working Space or Business Center) have been on the rise in Hong Kong for the past 5 years. Of course, the concept of sharing an office floor with different tenants has been existing for a long time. We all know The Executive Center, Regus and Compass Office in Hong Kong who are key players for companies who wish to have a corporate image. However, there was no solution available on the market for SMEs and startups looking at being flexible and saving money on their rent.

At one point in my career, I was heading the sales team for one of the first co-working space operator established in Hong Kong. Our client base were startups and SMEs. In 2015, we were the biggest player in Hong Kong with 50,000 sq.ft divided into 4 locations.

We were offering flexibility, incredible working environment, a great pool of community managers, premium services and a (very) attractive pricing. I always thought this would be the future of workplace.

However, there was a lack of knowledge and communication in Hong Kong regarding serviced office and co-working spaces. Companies were not aware they could have access to a less expensive alternative while benefiting from more exposure at the same time thanks to being located in a Grade A building.
 
Then WeWork arrived. When they entered the Hong Kong office market in 2017, it improved massively the awareness about co-working spaces. Even though WeWork was charging a hefty premium, companies still decided to follow their brand. They chose to rent premium Grade A locations with luxury fit-out and it changed the way people perceived co-working space in Hong Kong.
Tower 535 - WeWork first location in Hong Kong
Tower 535 - WeWork first location in Hong Kong
Since that day, we have seen hundreds of either newly or established companies moving to various international serviced offices providers (Spaces, Regus, The Executive Centre) and local brands (Compass office, Garage Society, Eaton Club just to name a few).
 
Is it going to change? I do not think so. It is quite the opposite. From the day companies understood they could occupy a grade A+ office with a premium address in the most expensive city in the world by signing only 3 months to 1-year lease, the industry has been growing exponentially thanks to a strong demand coming from companies all around Hong Kong.
 
Why would a company X pay HK$800-1,200 per sq.ft in a renovation (it would ultimately have to remove the decoration when it decides to relocate) and lock itself into a 3 or 4 years lease?
 
Why taking care of:
  • the cleaning,
  • the printing company,
  • setting up and maintaining the internet system (and all the other IT-related equipment),
  • making sure the pantry is always full of snacks and the coffee machine in working condition.
In addition, since the beginning of the outbreak and the WFH (Work From Home) policy, more companies are downsizing and considering switching from traditional office space to serviced office.
 
Now you have read this, you must ask yourself why would a company that needs flexibility still considers traditional office while there are plug-and-play solutions out there?
 
The answer is easy – they should not! At Nextspace, we assist companies in finding their next office. We ask you the right questions, assess your situation and provide a tailored plan for you. So why not considering serviced office?
 
Contact us today and request a quotation that fits your company aspiration. We will send it to you in 1 working day so you can start working and save money in a timely manner.
 
Needless to say, this service is free of charge for our clients.
 
Bastien Cuny

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