_Three flexible office space providers on future market challenges and opportunities
Knotel
Eugene Lee
The service offering
Knotel is the premier provider of flexible office space to companies of 50 people or more. We provide full floors of anywhere from 3,000 to 50,000 sq ft, which can be fitted-out in a client’s brand style. Space is provided for as long as the company requires, although clients tend to commit to 2-4 year terms.
Key to the offer is our ability to expand or decrease the space provided to customers within their portfolio. Current customers range from Fortune 100 to high growth companies.
The growth trajectory
Knotel has witnessed significant demand for the ‘invisible service layer’ we provide to corporate occupiers. We are currently in control of 1.5 million sq ft of office space across four cities – New York, London, San Francisco and Berlin. This represents rapid growth given that we operated less than 150,000 sq ft at the beginning of 2017.
Knotel is continuing on its exponential growth trajectory, surpassing 2 million sq ft by year end with plans to open in multiple countries within the next year.
Market challenges & opportunities
The key challenge facing our business model – which stands in stark contrast to the capital intensive, high sales volume model of the co-working operators – is keeping up with insatiable client demand. In providing a flexible offer aimed squarely at large corporate occupiers, there is a clear opportunity for us to develop more partnership relationships with brokers, occupiers and owners.
Market opportunity also derives from changing corporate structures, with more emphasis on distributed teams, and the development of flexible approaches to both headcount and space.
Response
An increasing share (approximately 25% today) of the Knotel portfolio is delivered in partnership with property owners who recognise the need to offer flexible space within their development schemes and the enhanced services that we can provide.
The provision of space that can assume the branding of the client is also providing extremely popular with corporate customers who wish to protect their brand identities, their infrastructure and, although seeking flexibility, have no desire to co-exist in a space alongside other corporate entities.
The Office Group
Charlie Green
The service offering
We started TOG around 15 years ago to challenge the serviced office offer, by creating an office that was flexible, but one that was far more considered in terms of design. That was the driver, and then we layered over a real focus on service but we were challenging both serviced offices and traditional offices.
To do that and attract more mainstream occupiers, we had to deliver value. Part of that is price and part is understanding what people want from their space and what they don’t want. In essence, we have simplified the offer, focused on hospitality and looking after the people in our buildings and we aim to generate long term income from a short term platform.
Growth trajectory
The sector has grown enormously over the last three years, both in terms of supply and demand. Flexible workspace is a much more widely accepted form of tenure from smaller businesses and increasingly from corporate occupiers who see it as a bolt on to their core space needs.
We have grown to meet that increasing demand, buying and leasing buildings, having added around 16 buildings and 700,000 sq ft in the last three years.
The next three should see a similar growth rate, but with increasing competition we have to make sure that we take only brilliant buildings in brilliant locations. If we do that, we will ensure we have a robust business model in any economic climate. We are also exploring expansion internationally for the first time, with the focus on Germany and New York as the first locations.
Market challenges & opportunities
Technology has been the biggest influencer in the last three years and is likely to have the same impact moving forward through the next three. The pace of technological advancement is increasing all the time, so it is difficult to predict the impact, but we will be seeing huge data capture that will lead to more intelligent building design, from use of space, to access to sustainability.
With technology comes an increased awareness across all industries that the flexible, co-working offer is a dynamic and viable option, so hopefully, demand will continue to increase.
Future response
We are investing heavily in technology, rebuilding our software platforms, capturing data, improving our digital experience on the website and app and understanding how we can improve the delivery of the construction process.
But we have to layer that with an even more acute understanding of the human element to what people want from a workspace and that will always be our priority when creating our product.
We design every building individually and that gives us a unique perspective, allowing us to stay current and address the changes in work behaviour that are evolving at such a furious pace.
Justco
Wan Sing Kong
The service offering
JustCo has established itself as one of the leading co-working space providers in South East Asia, with centres located in Singapore, Bangkok, Jakarta and Shanghai. We aim to ‘make work better’ for our members and go beyond being simply an aesthetically pleasing place.
We provide a large platform that houses a diverse community of talented and likeminded individuals, SMEs and Fortune 500 companies. Individuals and companies alike are provided with ample opportunities to network, collaborate, exchange knowledge, insights and help drive success to their business and professional journeys.
The growth trajectory
JustCo has enjoyed tremendous success in a short span of time. One of our latest milestones is the fundraising round with Singapore’s sovereign wealth fund, GIC, and multi-national property company, Fraser Property Limited, on a joint investment of US$177 million. By 2020, we aim to operate 100 centres across Asia. This joint investment will enable us to build presence in South East Asia and strategically enter key Asian markets.
An entrepreneurial mindset is part of our DNA and we are constantly striving to offer creative solutions to our members’ workspace needs. One example is the launch, in May 2018, of the Verizon Innovation Community, managed by JustCo.
The partnership with the telecommunications giant is a first-in-Asia initiative, connecting a vibrant technology community in an innovation space. Another example is Singapore’s first co-working centre in a shopping mall at Marina Square, which features a very different experience to attract clients from the retail and lifestyle industries.
Market opportunities & challenges
In addition to being a thriving ground for start-ups, freelancers and entrepreneurs, we foresee more enterprises and multi-national corporations adopting the concept of co-working.
These businesses are starting to see the value of co-working environments where they can connect to different communities and talents, stay abreast of technological innovation and disruption, get access to members’ exclusive networking and knowledge sharing opportunities, while at the same time reducing their real estate costs.
Predictably, consolidation has also started to occur as today’s co-working industry is becoming more mature and scale is required to cater to larger workspace needs, with each operator offering differentiated pricing, locations, designs and more to cater to specific target audiences.
Response
Scale is crucial to JustCo as we seek customers of all shapes and sizes to harness the full benefits of co-working. Accordingly, we have been constantly focused on ramping-up technology solutions and enhancing service offerings to facilitate collaboration and networking opportunities amongst the growing base of community members.
The way professionals and larger enterprises think about working environments has been reshaped and we will continue to disrupt the conventional real estate market and make changes in the co-working landscape.
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