By Sheah Liang Lee
2022 promises economic recovery for Malaysia, however, the office property sector continues to face the risk of inoccupancy. Combined with the recent trend of hybrid work arrangements, office spaces could soon be facing an even more dire crisis.
Unoccupied office space is not only adversely affecting building owners and management but also has a knock-on effect impacting the entire commercial property market and economy in general. Other retailers such as restaurants, convenience stores, supermarkets, gyms and more are now increasingly reluctant to take the plunge on a physical space within offices or mixed towers for fear of low footfall and dwindling customer bases.
More Relevant Than Ever
With the flexible nature of work now, you could be forgiven for thinking that most would prefer working from home and thus co-working spaces would be negatively impacted. But in reality what we have observed is the opposite. The market is growing more rapidly than before with more demand from the many new sprouting micro-businesses and even more from individual corporations requiring an ad-hoc space for a day or two to work distraction-free away from home without having to go into the office.
But it isn’t just with the working public that we see an increasing benefit when it comes to co-working spaces, office buildings and space owners have also gained too. With the increasing demand from the public for co-working spaces as work arrangements continue to be in flux, what we have witnessed is a continued opportunity for growth for co-working spaces in recent times.
With co-working spaces blossoming across the country, they have been a boon to office space owners who have been struggling with vacancies. Co-working spaces have been taking up a sizable chunk of this space, converting once barren spaces into thriving flexible workspaces.
The existence of co-working spaces is not only promising for the property market in the short term but also offers a long term solution.
Long-term Knock-on Effects
In the long term, co-working spaces can be equally influential and beneficial to the market as a whole.
Successful co-working spaces introduce thousands of businesses and entrepreneurs to a working space-familiarizing them with the commute, the area, its facilities, amenities and more. This leads to a unique long-term opportunity of converting co-working space users to potential prospects for leasing spaces in the building or area, in what amounts to a trial of the space of sorts.
Meanwhile, the knock-on benefits continue. As foot traffic in the location increases through the stream of co-working space users, the potential of transforming a once unpopular location into a bustling one is high. With the increased influx of people, property owners will then have the ammunition to lease more space within the area to establish eateries, convenience stores, gyms and the like to cater to the increasing crowd.
This will increase property value alongside demand, filling up the unoccupied office spaces and shop lots.
Enterprises Leading The Co-working Space Trend
Another recent trend that we are seeing in the market is the long term and large scale residencies of enterprises and public listed companies at co-working spaces. Just speaking from my personal experience, the demand for co-working spaces from enterprises and public listed companies increased by 83 percent last year. This too spells good news for the property market and building vacancies.
With the adoption of hybrid work arrangements, office work will become more agile and flexible moving forward. We envision a future where enterprises subscribe to co-working spaces with branches in multiple locations that can cater to a workforce that is always on the move, allowing their staff to work on a desk from anywhere in the city and the country.
The case for co-working spaces for enterprises is a clear one. The lease at any co-working space is flexible with lower deposit requirements. Co-working spaces in general also help enterprises minimize capital expenses such as office maintenance and utilities will all be provided for.
As these enterprises begin to take in co-working spaces, there is an opportunity for the immense growth of co-working spaces – leading to greater uptake of unused space by co-working operators or conversion of these enterprise users to actual leasing tenants within the building which will also see this unused space being utilized.
All in all there are a great deal of benefits of co-working spaces that often go unnoticed especially with regards to its ability to address pressing issues within the property space. I hope that this shines a greater light on the potential for collaboration and synergy between co-working space operators and building management/property owners to further grow the market and address the longstanding space vacancy issues.
Sheah Liang Lee is the Co-founder & CEO of INFINITY8
