Can local co-working markets in Asia provide the type of dynamic environment where startups can thrive? This is one bet that the Philippines top real estate developer, Ayala Land, is betting on as they aggressively expand their co-working space holdings across the country in the face of stiff foreign competition in the form of WeWork.
This development in the Philippines isn’t an anomaly, as recent stories from countries across the region attest. In Vietnam, Ho Chi Minh City is turning to co-working space to address a lack of supply in traditional office space, and the co-working space market is predicted to expand dramatically in China in the coming years with major international and local investment.
These stories demonstrate that the stock of co-working and flexible working space is on the rise across the Asia Pacific region, with one study showing a 150% increase in total available stock from 2014-2017. And it’s not only freelancers taking advantage of this trend.
An ever-increasing amount of startups and larger businesses have also turned to co-working environments in order to stimulate innovation, address office space challenges, and meet employees’ desires. For startups in particular, there are a multitude of benefits from setting up shop in a co-working space.
How Can Co-Working Spaces Benefit Startups ?
The flexible and innovative nature of startups make them a natural fit for co-working space. This type of work space embraces these concepts, and aims to create an environment of connectivity. Some of the major benefits that startups have seen in co-working space include:
Affordability- the flexible nature of co-working space allows startups to set up shop without huge investments in office space, utilities and upkeep. Low overhead can give startups the chance to invest their limited resources where it can make the most impact.
Flexibility- as startups grow and expand, so can their use of co-working space. This removes the need of having to jump from office to office, with the logistics and costs associated with moving and set up.
Employee demand- employee demand is constantly evolving, and many of the newer generation often prefer the co-working environment. Startups who embrace this trend can get a leg up in the hunt for top talent, especially as it’s a work environment that can improve communication with Millenials.
Building relationships- working among other individuals and companies can help with networking and building relationships. This is perhaps one of the biggest benefits people think of when considering a co-working space.
Innovation- new and exciting ideas are bred in dynamic and stimulating environments, or so the claim goes. Co-working space can help spark startups innovation and lead to exciting new ideas to drive their businesses forward.
Of course the co-working trend has its critics and drawbacks as well, mainly associated with a lack of consistency (changing work stations every day, for example), a high level of distraction (noise, chatter, events, etc.) and increasing prices in many locations.
Many of these drawbacks depend on the rules and regulations at particular co-working spaces, so startups should do their research before committing. Not all co-working spaces are created equal, and it’s mainly a question of companies identifying one that fits their preferred style and culture.
How does the Asian Market Look?
The dramatic increase in co-working space above are forecast to continue into the future in the Asia Pacific region. Co-working space has already seen a sharp increase in the last decade, and there are no strong signs of letting up, particularly as the startup and gig economies continue to drive demand.
One inevitable challenge that comes with the increased demand, if it is not matched by a similar increase in supply, is higher prices. This has already been the case in most countries, although there is of course dramatic variation across the region.
There’s a danger that the trend which started out as a cheaper alternative to traditional offices, will turn into a boutique trend that will price out many startups and freelancers. This could be further exasperated by the recent moves of corporations into co-working spaces, with their deeper pocketbooks.
Where to From Here?
Whether more national firms will enter the co-working space market like Ayala Land in the Philippines, or the international presence will take the lead, the co-working trend will surely keep growing.
As more established businesses, embrace the trend, there will likely be changes coming to the co-working environment in many location. For now though, startups will certainly continue to set up shop in co-woring spaces across the region, and find a range of benefits in doing so.