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Co-Working Spaces - Hong Kong Land Says No

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  1. #1

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    Co-Working Spaces - Hong Kong Land Says No

    Do co-working spaces make a good return?

    As suspected, after visiting a few, unless they own the property, chances of the operator making money are quite minimal.

    We looked at some of these spaces - @3-5K a desk (and more if you wanted a secure room), no matter how we did the math, it was cheaper for us to lease an industrial/office unit.

    Also could not understand how some of these companies, with presumably significant amount of confidential / IP at stake, would do presentations in open conference rooms, work in glass walled offices where anyone could take a peek and see the whiteboards.


    “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 office 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.
    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.”
    Hongkong Land, the biggest landlord in Central, does not want to lease space to co-working operators | South China Morning Post
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  2. #2

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    Quote Originally Posted by shri:
    Do co-working spaces make a good return?

    As suspected, after visiting a few, unless they own the property, chances of the operator making money are quite minimal.

    We looked at some of these spaces - @3-5K a desk (and more if you wanted a secure room), no matter how we did the math, it was cheaper for us to lease an industrial/office unit.

    Also could not understand how some of these companies, with presumably significant amount of confidential / IP at stake, would do presentations in open conference rooms, work in glass walled offices where anyone could take a peek and see the whiteboards.






    Hongkong Land, the biggest landlord in Central, does not want to lease space to co-working operators | South China Morning Post
    I think these places are geared towards individuals and small teams who spend a significant amount of time working remotely. And also depending on the location some of them have receptionist/secretarial services, nice meetings rooms, front lobby, etc. There's the flexibility - no need to sign a long lease, buy your own furniture. If the company takes meetings with clients I can see why something like this in a business district makes more sense than office space in an industrial area.

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    office space in an industrial area.
    Should have mentioned that these were coworking spaces in Industrial buildings.

    Besides, to get any discount or to get closed spaces, you need to commit to longer term rentals.

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    Quote Originally Posted by shri:
    Should have mentioned that these were coworking spaces in Industrial buildings.

    Besides, to get any discount or to get closed spaces, you need to commit to longer term rentals.
    Ah OK. Yeah there are a few in Wong Chuk Hang, I've popped into some to on work from home days to get away from the children. I never got the sense that there are really permanent "offices" there are tenants but a lot of digital nomads.

    I also think they are eyeing themselves as venues for private events.

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    You don't have to pay 3 months deposit like standard commercial unit. I agree about the privacy though, some rooms have curtains to block the view though.

    Like they said, unless they own the building it's hard to make money, like a lot of retail business in HK.

    One factor that wasn't mentioned is networking, when you share your working space with 100s of companies, you do get to meet a lot of people.


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    All them WeWorks and other co-working BS companies try to promote themselves quite heavily. I drank quite a lot of free beer at their various events even without trying. If I was I would be drunk almost daily with zero HKD spent I doubt I'll ever pay them, even if I revert to my old digital nomad ways. Better to work from home or, gulp, Starbucks.

    Worst case scenario they go bust at some point and that's that.


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    Quote Originally Posted by shri:
    where anyone could take a peek and see the whiteboards.
    This reminded me of something I saw in the week. I visited a company that I may have wanted to cooperate with and I happened to see a whiteboard through an office partition window, big capital letters, 'PAY LAWYERS URGENTLY!!!'...
    shri, jgl, hullexile and 2 others like this.

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    Like they said, unless they own the building it's hard to make money, like a lot of retail business in HK.
    Quick... go lease an entire floor on a mall and make it a co-retail space.

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    the last i looked at this co-work space was in singapore, the landlord was unable to get the whole building tenanted out so some innovative chap went to them to convert the whole place into a co-work office. but its still fairly empty. doubt it will last long.

    you can make money if you over-contract your space and hope these guys only come in 30~40% of the time, so for the same area you can rent out to 2~3 people...


  10. #10

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    Quote Originally Posted by shri:
    Quick... go lease an entire floor on a mall and make it a co-retail space.
    singapore has quite a few these days, they rent a shop, put in tonnes of little cubicle boxes, and rent each box out to the retailers. the renters pay a rent plus a commission on anything sold.

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