Greater China’s co-working office sector has seen rapid growth and expansion from a few large venues several years ago to 550 locations in key city markets at the end of first quarter 2018, according to Cushman & Wakefield’s latest report, Greater China Co-working Office Space.
According to the report, domestic operators currently dominate the co-working office sector, with 79 percent market share in mainland China’s first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen.
Strong fundamentals underpin the sector, notes Cushman & Wakefield, including:
- An influx of capital from corporates and venture capital firms
- The rise of millennials and a new age of entrepreneurialism
- More multinational companies seeking flexible lease terms and cost-saving
- Advanced technology spurring the co-working revolution
But because the sector is still in its infancy, the market is fragmented in some cities, such as Shenzhen and Guangzhou, where the number of operators running one center is much more sizeable than Beijing and Shanghai’s more mature co-working office markets, where there are relatively few operators running one center.
“Among the largest operators, only three to date — UCommune, naked Hub and WeWork — operate dedicated co-working locations in all the major gateway cities in the greater China region,” states the report. “Together, they account for one-fifth of all locations in [the] cities of Beijing, Shanghai and Hong Kong.”
Increasingly, the report states corporations are moving to co-working space in greater China because it allows them to reduce costs related to real estate operations and maintenance (most co-working spaces are furnished and come equipped with phones and high-speed Internet), and membership fees cover needed services. These benefits should help fuel growth of the co-working office sector in the region.
Developers have also taken notice of the co-working office trend, according to the report’s Vicky Shen, Cushman & Wakefield’s senior director, head of office agency China. “Many see partnering and leasing some of their office space to a co-working operator, or self-developing a co-working office space in their office projects, as a viable business proposition.”
During the next couple of years, Cushman & Wakefield believes the co-working office sector in greater China will start to consolidate, and that the concept will expand into secondary city markets, integrate with retail assets, and that mixed-use developments will include co-working office and co-living space.
“In the future in the greater China region, we expect users to increasingly view co-working not just as a space solution, but also an overall product, which takes into consideration space, design, amenities, technology, the community network and services,” notes Shaun Brodie, Cushman & Wakefield senior director, head of occupier research greater China, in the report.
