WHAT will happen to co-working space in Malaysia? At a property outlook 2019 event last Tuesday, it was revealed that a co-working space provider, or one of the early players in the market here has ceased operations.
No reasons were given but it is believed that the company suffered losses due to stiff competition in the market.
According to Knight Frank Malaysia managing director Sarkunan Subramaniam, there are now about 40 players in the market. This translates to over 170 centres in just Klang Valley alone.
Among the players are WeWork, Regus, Colony, CoLabs, The Starling, Impact Hub and Common Ground.
The new kid on the block is Wotso, a joint venture between UEM Sunrise Bhd and Australian-based BlackWall Ltd. Sarkunan said he is worried about the fuure of the co-working space environment.
While co-working space can work for the growing millennial workforce because of the low cost, he wonders if it it will work for the companies in the long term.
He said there is a lot of risk going into co-working space. “If the co-working space provider is going to go partner with someone who is overstretched and may not be in the market, they are taking a lot of risk. For landlords (owners of office spaces), it is important for them to see the financial stability of that particular group and how big a market share they have. A lot of them now just want to partner with the landlords but landlords are desperate. Landlords just want to spread out rent but rent proposition may not be there.
“So, you really need to do your due diligence on your partner on their brand and financial backing, and see whether this guy is going to be around in the future. All these are very important to look at,” he said.
Sarkunan said the co-working space environment was formerly in a different shape. As far as the current situation is concerned, it is all about market share and getting the quantum in order to survive, he said.
“What is going to happen is what worries me. I think in two years’ time we are going to see quite a number of this co-working space providers either merging or dropping totally out of the market. We have already seen this recently with one company going bust,” he said.
Sarkunan said while co-working space providers struggle for market share, next will be the survival.
Common Ground may have an upper hand thanks to its partnership withPetronas Dagangan Bhd (PDB).
The partnership involves the incorporation of Common Ground into Petronas stations across the country and transforming them into an innovation hub with hot desking, fixed desking and private offices - some of which will be occupied by the PDB team.