Newsflash - The Rise of Co-working Space in Hong Kong

CBRE today launches its Viewpoint, The Rise of Co-working Space in Asia Pacific: Boon or Bane?

Key Highlights:

  • Globally, co-working space has enjoyed tremendous growth in recent years—surging from just 75 spaces in 2007 to more than 7,800 in 2015. Most co-working spaces in Asia Pacific are located in gateway cities, including Hong Kong, Singapore, Shanghai, Tokyo, Sydney and Melbourne.
  • Cities in Asia Pacific lag behind those in the West, such as New York and London, which host at least 120 co-working spaces each. Currently, there are approximately 40 co-working space operators in Hong Kong.
  • Local and regional co-working space operators still dominate in Asia Pacific, accounting for 60% of the market share. However, several international players are expanding aggressively. In the first half of 2016, WeWork leased 60,000 sq. ft. and 100,000 sq. ft. for its centers in Wan Chai and Causeway Bay, respectively.
  • In Hong Kong, the start-up boom is one of the key drivers of the growing demand for co-working spaces. The number of start-ups increased by 46% y-o-y to 1,558 in 2015, according to Invest HK.

Views from Rhodri James, Executive Director, Advisory & Transactions Services – Office, CBRE Hong Kong

  • Unlike most Asia Pacific gateway cities, where around 70% of co-working spaces are in fringe or decentralized areas with lower rents, over 50% of co-working spaces in Hong Kong are situated in prime areas, with the majority located in older office buildings. Operators in Hong Kong, a highly location-sensitive market, are seeking to increase their appeal to users by ensuring they are near core areas with good access to transport.
  • Competition among co-working space operators is intensifying as they open more centers, lease larger spaces and increase their presence in prime areas. This will increase real estate occupancy costs and squeeze profit margins. Co-working space operators need to plan expansion carefully, keep costs in check and be aware of this increasing competition, in addition to conducting thorough assessments of supply and demand dynamics. 
  • Operating a co-working space is not the same as straightforward office leasing or providing a space for people to work—the key to running a successful co-working space is creating an experience, building a community and facilitating business and learning opportunities for end-users.
  • The rise of co-working space in Hong Kong implies a need for a new approach towards office design to facilitate better collaboration and interaction between people. Landlords may want to decide on whether to lease space to co-working operators or develop their own co-working platform following a detailed evaluation of the costs and benefits.

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