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Lam Ka-sing

As the co-working craze catches on in the city, with every major developer latching on to the bandwagon, Hongkong Land, the largest office landlord in Central, does not even look remotely interested.
This is despite the supply of co-working space in Hong Kong expanding by 20 per cent to 1.2 million square feet in the five months to May following the entry of some major international co-working brands. Some 48 per cent of the space is in Grade A offices, according to figures from CBRE.
“Co-working operators are not making money,” said Neil Anderson, director and head of office space at Hongkong Land, which owns 4.84 million sq ft of floor space in buildings such as Alexandra House, Chater House and Jardine House in Central, the most expensive place to rent office space in the world.
“If you are in a start-up position, I think it really is difficult to make it a profitable business.”
Calling himself “the voice of doom” at a conference hosted by The Urban Land Institute in early June, Anderson has turned down some major co-working operators who wanted to lease space from the company. “I don’t want the ‘co-working’ name in our portfolio.”
Is the burgeoning co-working office market set to overheat?
One other reason for Hongkong Land’s reluctance could be the high demand from Chinese companies for grade A space in Central, where rents are close to reaching the all-time high of HK$210 per sq ft set before the 2008 financial crisis.

Rents at Exchange Square owned by the company reached HK$165 per sq ft in May, according to CBRE.
But other landlords have embraced the co-working wave. Hysan Development, Chinese Estates Holdings, Link Reit and Chinachem Group have leased out substantial office space to co-working operators such as theDesk at One Hysan Avenue, Regus at Windsor House, and KrSpace at One Hennessy.
Lai Chi Kok – Hong Kong’s version of Dongdaemun and Camden Market for fashion start-ups
Even Swire Properties has launched its own co-working brand “blueprint” at Taikoo Place in Quarry Bay.
Dane Moodie, director of advisory and transaction services at CBRE Hong Kong, said many landlords see co-working centres as a way to add value to their office buildings, but in some cases landlords view them as competitors.
“The volume and scale of some co-working operations mean their footprint could be larger than some landlords’ portfolios,” Moodie said.
However, the profitability of co-working operators is not particularly impressive, which is in the single digits, according to a source.
“When operators first open their new locations, they have to offer discounts to ramp up occupancy, which affects their margins,” said Philip Pang, associate director at Colliers International, adding that some like Urban Serviced Offices have had to close their business. “The larger operators are targeting large companies and multinationals [for long-term leases] rather than only start-ups to sustain their growth.”
Discounted co-working space scheme for 1,000 young Hongkongers unveiled to help start-ups
Analysts also said that the high overall rents in the city could put even more pressure on the operators.
Keith Hemshall, head of office services at Cushman & Wakefield, believes the battle for market share will intensify as mainland Chinese operators enter the market.
“Following in the footsteps of UCommune who recently entered the Hong Kong market, Kr Space leased eight floors totalling 72,500 sq ft at One Hennessy in Wan Chai,” he said, adding that several other Chinese operators are also looking for suitable space to launch in the city.”

Hemshall expects the sector to go through a period of consolidation, resulting in smaller local players losing out to those with wider regional networks and deeper pockets.
“Chinese market leader UCommune snapped up Shenzhen-based WeDo and Beijing-based Woo Space this year,” he said.
Chinese co-working space operator Kr Space moves into Hong Kong
He said operators will seek to enhance their services to members to differentiate themselves from their competitors, citing the example of Campfire Collective Spaces, which also offers co-living accommodation to its members.
Co-working operators, however, remain upbeat about the market prospects.
“Our growth is healthy,” said Nancy Yip, area director of IWG Hong Kong, the parent company of Regus.
“We are planning rapid expansion [in Hong Kong] from 18 locations to 23 locations,” she said, adding that the company has had no difficulty in letting out desks and controlling costs and that profitability was not an issue for them.
Yip also said she was not worried if some major landlords did not want to lease space to co-working operators.
“Where there is demand, there will be supply,” she said. “When the trend is set, the market will accept it.”


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Hong Kong property

Why is Hongkong Land, the biggest landlord in Central, avoiding the co-working frenzy?

Some of Hong Kong’s top developers like Swire Properties have entered the co-working space. The company operates a co-working brand called blueprint at Taikoo Place in Quarry Bay. Photo: David Wong

Interior of Garage Society, a co-working space, at Garage Society in Central. 03JAN18 SCMP / Dickson Lee

View of Exchange Square (Left) and Jardine House (Right) in Central. 27SEP17 SCMP / K. Y. Cheng

Causeway Bay set to become the heart of co-working space in Hong Kong

A Campfire co-working space. The Hong Kong company said it hopes to attract the start-ups and fintech firms flocking to Causeway Bay. Photo: Handout

Campfire founder Wang Tse poses for a photographer in the office at 5/F Remex Centre, 42 Wong Chuk Hang Road, Wong Chuk Hang, Hong Kong. 12JUN17 SCMP / Dickson Lee [FEATURES LIFE]

JPG for ONLINE

VPOINT at Tang Lung Street, Causeway Bay. 12DEC17 Picture by Robert Ng

Chinese co-working space operator Kr Space moves into Hong Kong

Kr Space will rent 83,000 square feet of space at One Hennessy Road in Wan Chai, pictured. Photo: Edmond So

Chinese co-working space provider Ucommune considering Hong Kong IPO over longer term

Mao Daqing, founder and CEO of Chinese co-working office space provider Ucommune. Photo: Handout

Co-working office firm Spaces signs largest rental deal this year in Hong Kong’s Central

The Amsterdam-based company has leased Sun House in Connaught Road, Central, as demand for shared office space is seen picking up in the city and as mainland Chinese firms scale back their investments in Hong Kong offices

A view of Hong Kong’s Central district. Co-working space provider Spaces has signed the largest rental deal this year in terms of area in the city’s core business area. Photo: Joshua Lee

Co-working spaces have become commonplace — now many think shared living spaces will be next

The Collective Old Oak in West London opened as the world’s largest co-living space comprising 550 micro units with communal facilities including kitchens, spa, gym, restaurant, games room, cinema, library and disco, along with a co-working incubator hub. Photo:

This handout image show an artist's impression of Hong Kong-based Woods Bagot is redeveloping a former IT mall in Singapore into an “experiential hub of the future” with a shared living component. For Charmaine and DESIGNCO-LIVING. Photo: courtesy of Woods Bagot [2017 FEATURES POST MAGAZINE INTERIORS]

This handout image shows WeLive communal dining room in Hong Kong, for Charmaine and DESIGNCO-LIVING. Photo: courtesy of WeLive / WeWork [2017 FEATURES POST MAGAZINE INTERIORS]

In 2016 The Collective Old Oak in West London opened as the world’s largest co-living space. The PLP Architecture-designed project comprises 550 micro units with communal facilities including kitchens, spa, gym, restaurant, games room, cinema, library and disco, along with a co-working incubator hub, for Charmaine and DESIGNCO-LIVING Photo: Nick Guttridge 04FEB17 [FEATURE]