Officebroker.com is rebranding as Officio to move away from the broker model and aid clients in finding long-term solutions, rather than completing short-term goals.
The beginning of coworking consolidation
Coworking space operators are being affected by a lack of funding from venture capitalists.
The China Real Estate Chamber of Commerce (CRECC) found that 40 companies disappeared from January to October 2018 and 40% of coworking spaces are currently half empty.
These startups heavily rely on fresh financing, so analysts believe that smaller firms won’t be able to compete with major operators, such as WeWork, and will either close down or be acquired.
Kr Space, one of China’s largest coworking firms, says it is being more particular in expanding and cutting overlapping business positions to reduce operating expenses. An anonymous executive for the company also revealed that the operator recently cut 12% of its staff.
“The reason coworking operators are in the doldrums is quite simple: they are leasing desks quite cheaply while their office acquisition and operating costs are high,” said Gary Wen, head of the commercial department at Savills North China. “They have been telling investors that they can rent out a desk at 4,000 yuan a month but they haven’t been able.”
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Beijing coworking spaces in secondary areas range anywhere between 1,000 and 2,000 yuan per desk per month.
Sean Wang, vice president of Cushman & Wakefield Greater China, said that coworking operators losing rent revenue is damaging, but firms that haven’t recklessly expanded will survive.
On the other hand, Wen believes major industry consolidation is on the horizon.
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JLL research revealed that Dallas-Fort Worth is ranked 12th out of the country’s top 15 coworking and flexible space markets, taking up 3 million square feet of space.
Office provider LABS has launched its 96,100 square foot flagship property LABS House in Bloomsbury, London that features coworking, offices, and full-service dining.
Cool office interiors are ideal at first glance, but looking into a company’s principles, such as gender equality and flexibility, will be the factors that retain talent.
Colliers International revealed the success of the office market last year due to high demand for coworking and tech firms, but predictions for 2019 are uncertain.
Shared office space providers as tenants have become the norm for many landlords and building owners, and now many REITs have adopted coworking as it continues to expand.
Brookfield Properties has teamed up with Convene to spruce up the 73,000 square foot Brookfield Place into a full-service events venue that accommodates up to 500 people.
Many coworking operators pride themselves on massive, rampant expansion, but some industry experts believe this growth could lead to failure and consolidation in 2019.