MilkGarage, which manages a network of shared office facilities under a membership programme, has just teamed up with another operator with four work spaces in Kowloon, bringing its total locations to 28 across the city. It is keen to find more spaces close to public transport links.
“We will definitely get more than 30 locations by the end of the year and we are trying to spread to as many MTR stations as possible as we see that working from everywhere is no longer a trend, but a fact,” said Wu Fangyu, founder and chief executive of MilkGarage.
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With office vacancy rates soaring to a 15-year high of 7.5 per cent, a change in behaviour is under way: co-working space is becoming attractive again as firms eschew offices that cost tens of millions of dollars in annual rent for flexible arrangements during the post-coronavirus era that include a mix of working from home and working in the office.
Founded in 2019, the network began when the shared office space sector in Hong Kong had just passed its peak growth period between 2016 and 2018.
Several operators announced expansion plans, only to beat a hasty retreat when the economic downturn spurred by the social unrest of 2019, and then the coronavirus pandemic, sapped demand.
It is unfortunate to see underused space in Hong Kong, where office rent is the highest in the world, said Wu, who started out with five work spaces. Within two and a half years, MilkGarage had teamed up with big operators like theDesk with its seven stations in Hong Kong, and Singapore-based The Great Room which offers 24,000 square feet of high-end co-working space in Swire’s Grade A office block, One Taikoo Place.
“It is a win-win strategy. Like operating an aeroplane or movie theatre, there is no point having empty seats, when there is increasing demand [from people who] now want a cool space to work. We are like a matching platform,” said Wu.
Members, who pay about HK$12,000 a year for a pass with MilkGarage, can access any flexible working space that has joined the network – like a membership of a chain of gyms.
Operators share revenue with Wu’s network and will only pay until someone takes a permanent lease with the them.
“It is all about networking, and this kind of relationship helps everyone. It gives us flexibility while giving MilkGarage extra sustainable space in Quarry Bay,” said Rasheed Shroff, founder and managing director of the sustainability-focused Banyan Workspace in Quarry Bay.
The market for flexible working space is picking up again in Hong Kong after the slump brought about by tough social-distancing rules during the early months of the coronavirus pandemic.
“Previously many operators were in overexpansion mode, but then the market adjusted and many closed down and disappeared, creating a new balance point between supply and demand,” said Patrick Mak, executive director at Knight Frank. “We think it will stabilise again towards year-end.”
Landlords are getting in on the act. Last month Hongkong Land opened Centricity Flex, featuring 25,000 square feet on the 17th and 18th floors of the Landmark Edinburgh Tower on Queen’s Road Central.
Swire Properties, which already operates the Blueprint flexible workspace, is considering adding more at its Two Taikoo Place commercial property in Quarry Bay, scheduled for completion in 2022.
Hong Kong had the third-highest number of co-working spaces in the world last year, at 166, after London and New York, according to a survey by CircleLoop, which operates a cloud-based business phone system.
“No one can deny that the 2020 pandemic has had a lasting impact on the way that companies work for good,” CircleLoop said. “As part of remote working, completing your workday from co-working spaces is a concept that businesses are taking advantage of more than ever before.”
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