Why are co-living and co-working spaces popular?
According to Datuk Paul Khong of Savills Malaysia, collaborative spaces appeal to younger professionals due to three distinguished factors, namely: cost, convenience, and community.
Traditional leases require tenants to bear the costs of letting fees and fitting out space, in addition to paying for utilities and security deposits of between one to three months’ rental.
Co-working enterprises remove the bulk of these cost concerns for tenants (or “members”) and provide parcelled units of “hot desks” ranging from RM400 to RM1,000 a month, dedicated desks, and small office suites for between RM2,500 to RM4,000, depending on the location, tenancy length, and the specific terms set by various operators. Even daily rates are available, with some operators charging below RM40 per desk a day.
These pricing ranges make co-working spaces appealing alternatives for individuals and organisations who require office spaces for any period up to a year.
Collaborative spaces also tend to increase the utilisation of assets whilst reducing inefficiencies wherever possible – the largest co-working entities around the world rely on computer-aided design to determine the most efficient utilisation of space and fixtures to ostensibly lower the operating costs of each workspace.
While collaborative spaces may look to be more expensive than traditional leasing options, a fully fitted and furnished option enables occupiers to move in immediately, reducing additional costs and time spent in getting a space ready for use.
Collaborative spaces typically require shorter tenancy periods, with some going beyond single-month commitments by adopting the ‘pay-as-you-go’ model.
With the minimum tenancy period of at least a year, traditional leases require greater commitment and provide less flexibility. On the other hand, co-living enterprises tend to be less flexible than their co-working counterparts, but they still fill the wide gap between traditional leases and short-term rentals.
The management of properties, traditionally the responsibility of the occupiers, is instead handled by co-living and co-working enterprises as the landlords.
The hassles which stem from a faulty lightbulb, a leaking pipe, or a defunct printer, are of little concern for co-sharing members, as the responsibilities of maintenance are absolved by the operators. With the management of a property taken care of, occupiers are apparently willing to pay a premium.
Co-living and co-working space operators have been taking up large spaces with long leases, and property owners are enthusiastic to enter such arrangements.
A long-term lease provides a stable stream of income for property owners over a prolonged period, and with the norm being wide spaces bundled into a single lease, there are fewer tenants for property owners to contend with.
WeWork, for example, took up about five floors’ worth of space, exceeding 100,000 square feet, in Equatorial Plaza – an expensive piece of real estate that might have otherwise been difficult to completely monetise.
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