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

The Hong Kong office leasing market is changing. Hong Kong has a strong traditional office culture. Yet the city is moving fast towards serviced offices with flexible leases, run by The Executive Centre, WeWork, Regus and other operators. Why?

The Executive Centre office in The Hong Kong Club Building

Serviced offices (also called coworking spaces or business centres) have been rising in Hong Kong for the past 5 years. Sharing an office floor with other tenants is not new. The Executive Centre, Regus and Compass Office are the key players for companies that want a corporate image. But for a long time there was no option for SMEs and startups that wanted flexibility and lower rent.

At one point in my career, I led the sales team of one of the first coworking space operators in Hong Kong. Our clients were startups and SMEs. In 2015, we were the biggest player in Hong Kong, with 50,000 sq.ft across 4 locations.

We offered flexibility, a great working environment, strong community managers, premium services and very attractive pricing. I always thought this would be the future of the workplace.

Back then, Hong Kong knew little about serviced offices and coworking spaces. Companies did not know they could pay less and still sit in a Grade A building with more exposure. Then WeWork arrived. It entered the Hong Kong office market in 2017, opening its first location in Causeway Bay, and awareness of coworking spaces grew massively. WeWork charged a hefty premium, and companies still followed the brand. They rented premium Grade A locations with luxury fit-outs. It changed how people saw coworking space in Hong Kong.

Tower 535 - WeWork first location in Hong Kong

Since that day, hundreds of companies, new and established, have moved to international providers (Spaces, Regus, The Executive Centre) and local brands (Compass Office, Garage Society and Eaton Club). Is it going to change? I do not think so. It is the opposite. Once companies understood they could occupy a Grade A+ office with a premium address in the world's most expensive city, on a lease of only 3 months to 1 year, the industry grew fast on strong demand from companies all over Hong Kong. Why would a company pay premium fit-out costs per square foot for a renovation it will strip out when it relocates? Why lock itself into a three or four year lease on top? Why take 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

Since the outbreak and the WFH (Work From Home) policy, more companies are downsizing and thinking about switching from a traditional office to a serviced office. So ask yourself: why would a company that needs flexibility still choose a traditional office when plug-and-play solutions exist? It should not. At Nextspace, we help companies find their next office. We ask the right questions, assess your situation and provide a tailored plan. Contact us today and request a quotation that fits your company’s goals. We will send it within 1 working day, so you can start working and saving on office rent sooner. This service is free of charge for our clients. For current options, see coworking space in Central and serviced offices in Central. Bastien Cuny