As businesses look to rebuild amidst the wreckage created by the pandemic, we’re now realising the implications of the ‘new normal’. Hyperbole aside, the impact of remote working, government lockdowns and more, has changed the landscape of the business world.
The traditional co-working model might actually be on the way out, as more businesses have scaled down on office requirements as remote work has become a reality rather than a last option. Given the capital intensive business model of the co-working industry, it is likely there will be more causalities as we move past the pandemic.
One co-working player in Malaysia is looking to change all of that and show they have the adaptability to be successful in today’s environment. Leading industry player WORQ, just launched a new product – Flexi-Team solutions. This allows businesses to have the option to combine and customize from different solutions that WORQ offers. Companies only pay for the space they need, not based on the total headcount of their teams, which goes against a traditional business model.
We explored the future of co-working last year during the pandemic
According to a survey by Randstad, 1 in 2 Malaysians want flexible work arrangements to continue beyond the pandemic. As the hybrid workforce expands, office spaces must transform.
We spoke to their co-founder and CEO, Stephanie Ping about their new product and how she believes the co-working industry is going to change in the short-term.
Can you describe your Flexi-team solutions and how businesses would benefit from it?
Ever since there has been a need to adapt to the WFH/remote working policies for a year now, many companies, even corporates, seem to be opting to use co-working spaces to support this hybrid workforce. In recent research by the Work Trend Index survey, 73% of employees want flexible work options to stay while 67% of the same respondents also wanted in-person collaboration.
As co-working spaces have membership options that are either based on per-person or per-usage, it is definitely more cost-efficient as opposed to renting office buildings for teams that do not come in very frequently. By using a flexi office space, companies can maximize the benefits of a distributed workforce and the cost savings from our network of offices.
Having identified this transition in the workforce, WORQ has put together the Flexi-Teams Solution where organizations pay for teams based on their usage – not headcount. This allows for teams to come in on a rotation basis for meetings, discussions, and even for a change of environment. Frequent drop-ins will be counted as daily users and infrequent drop-ins will only be charged a minimal access fee, giving them the flexibility to choose when to come into work. This allows for organizations to save heavily on full-fledged office spaces for all their employees.
Also, the plug-and-play convenience found in a co-working space and its collaborative community in nature, both champion the hybrid workstyle.
How did WORQ manage to stay afloat during the MCO (or lockdowns) in Malaysia?
As the market penetration of flexi office solutions in Malaysia is currently at 1%, before the MCO, with 3 co-working outlets and 1 enterprise outlet, WORQ’s occupancy rate was almost 80%, each outlet. During that time, we saw an increase in enquiries primarily from SMEs, as they opted for office solutions that provide more flexibility in terms of leases and fixed commitments.
During the MCO period, we’ve seen the number of enquiries reduce by 20% on average. In terms of occupancy, the overall occupancy rate reduced by an average of 15% across 3 co-working outlets. Still, WORQ managed to give out close to half a million in reliefs and rebates to help members sustain during those tough times.
For us, if a co-working space operator’s business model is well-structured, it will be profitable. Then, it can continue to grow by establishing more and more outlets exponentially, as each outlet is profitable and can drive the development of the next outlet. We were able to secure seven follow on investors, as well as loan offers from six banks, despite being in the middle of the COVID-19 pandemic.
How do you see the co-working space evolve – do you believe it will be able to bounce back and continue to grow post-pandemic?
When the pandemic struck and businesses were forced to close it’s doors for months, no one knew exactly when the economy would be back in full force – or even, bounce back at the very least. Co-working spaces were also affected due to the number of people working in their own spaces, with their own teams.
But now, as we manoeuvre our way through this pandemic and learn to adapt to the new normal, the future of co-working spaces does seem very bright.
Despite hosting quite a number of businesses under 1 roof/in various locations, our WORQ locations have been placed with strict SOPs to follow and for the convenience and safety of our customers, every business is placed at a distance from the other.
Yes, staying at home would seem like a good option but working in co-working spaces helps businesses feel some sense of togetherness and let’s face it, working together and bouncing off ideas with your whole team in the room is more effective than hosting a Google Meet.
And also as companies these days prefer not to deal with long leases and owning huge office spaces, co-working spaces are definitely here to stay. With office space solutions to match both small businesses as well as corporates, coworking spaces are definitely the workspace of the future.
Given the evolving workforce, do you believe the hybrid model is here to stay and why?
Before the hybrid work environment was first introduced, renters/tenants dealt with much hardship by accepting a “bare-bones” product and dealing with long leases just to rent a space. But nowadays, tenants want a higher level of service and lesser burden, with on-demand movement.
Due to the growing demand for a hybrid work environment and the convenience it brings organizations and workers, spaces that offer flexibility and collaboration will be the future of the workforce. Based on such demand, WORQ takes it a step further to not only provide flexibility and top-notch services but a “transformation” to the lives of our customers.
The chart below explains the value of the current coworking market by square footage
As indicated in the chart above, the red slice is currently the “served market” in Kuala Lumpur, which is at 1%, with an estimation of 1 million s.f., valuing at approximately RM200 million.
The remaining 2% of the unserved market to catch up to the Asia average of 3%, has an immediate untapped potential of 2 million s.f. or RM600 million in value. As the office market shifts towards 30% flexible demand in the long run (based on JLL research), we estimate that the Kuala Lumpur market will reach 15% in the next decade, which translates into 15 million s.f. or RM3 bln in value.
These numbers give us a realistic sense of the total market value and acquisition opportunities that we have ahead of us, which will position us as partners for real estate solutions. Thus, real estate as a service will become a norm to fuss-free solutions
What’s next for WORQ?
As a company that aims to revolutionise the co-working environment, our mission is to stay true to our core values of having a stable business strategy while championing growth and change. Having said that, apart from launching the Flexi-Team solutions, we are also looking to grow our space under management by 10 times to one million square feet in five years with the fresh funds.