Co-Working Spaces: More Than Just an Office in a Café
Co-Working Spaces Multiplying for Millennials
Normally, co-working spaces (CWS) feature a communal workspace with a shared reception, meeting rooms, access to high-speed Internet, printing and copy machines and cafeterias. Most of these amenities can be rented for a fee.
But the design of the co-working space depends on the needs of the clientele. Some venues have extra amenities such as food and beverages, art galleries, game rooms, beds and auditoriums to set themselves apart from the increasing crowd of CWS popping up in HCMC and Hanoi today. These communal spaces enhance the concept of flexibility, collaboration and diversity as well as appearing more attractive to prospective and current tenants.
In Vietnam, there might be another thing that you notice besides the office-cum-café atmosphere—the people filling the desks are largely under the age of 35. A study by CBRE Research Vietnam in 2017, found that 91 percent of co-working space members are millennials. This proportion is much higher than the global average of 67 percent and reflects Vietnam’s young demographics.
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Many of these young professionals are freelancers—more than 50 percent worldwide, according to a Deskmag survey in 2012. In 2017, CBRE Research Vietnam estimates that 54 percent of users in Hanoi and Ho Chi Minh City are either the founders or employees of startups, while approximately 14 percent are freelancers and self-employed. These startups include both local and overseas firms.
The study also found that more than 55 percent of CWS users work in the IT industry, with the remainder spread across various sectors including tourism, food and beverage, education, marketing and real estate.
Cost-efficient Options in Major Cities
In both HCMC and Hanoi, the number of CWS has grown exponentially. As of April 2018, there are 19 CWS in Hanoi and 15 CWS in HCMC, which is a 62 percent increase from 2017. By the end of 2018, both cities are expected to have a total of 45 co-working spaces.
Co-working spaces usually charge per person rather than by square metre like traditional offices. The main options include flexible desks, fixed desks and private offices. For flexible desks, rent is charged on a daily or monthly basis, while for the other two options, a monthly rate is applied. Some co-working spaces may also offer hourly rates for non-members. The advantages of this system are that users of CWS are not tied down to a rental contract or office mortgage. They also enjoy the freedom of changing locations if they so choose.
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The cost of renting a co-working space varies across cities. Co-working spaces in Hanoi and Ho Chi Minh City are currently priced lower than most other cities in the Asia Pacific region, which reflects the general cost advantage of renting office spaces in Vietnam. In HCMC, as some co-working space operators have expanded into the central business district area in the beginning of 2018, pricing for private offices reportedly increased from 30-50 percent in venues in prime locations.
Most co-working spaces are operated by major local operators, such as Toong, UP, Circo and Dreamplex but smaller operators are also opening rapidly, growing from 30 percent last year. Foreign entrants such as NakedHub from China and Hive from Hong Kong have started to make their mark on the market as well. Hive plans to open one more venue in the centre of HCMC by the end of 2018 and NakedHub will launch two venues in HCMC and Hanoi. Other international CWS operators are also looking forward to entering Vietnam in the next 2 years.
Targeting Their Niche Markets
In the past, CWS in Vietnam have not been located in prime buildings or areas since operators needed to keep rental costs at a manageable level. They’ve usually been found in underutilized buildings in decentralized locations, especially on the fringe of the central business district.
Office buildings are typically categorized with a rating of Grade A being the highest and Grade C being the lowest. Both Toong and Up operate their centres from buildings that are rated at B or below. In Hanoi, a few CWS have located themselves in Cau Giay district, an emerging office cluster, while CWS in HCMC tend to be more spread out on the outskirts of District 1, 2, 3, 4, Binh Thanh and Phu Nhuan.
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Recent developments pointed out that CWS operators are now changing their game and focusing on targeting their niche customers, which will dictate where they will be located.
For example, since Toong offers their spaces to a diverse number of clientele working in different industries, the design of their spaces is getting more differentiated.
Circo, in particular, has always been more interested in getting a prime, convenient location for their members. So as they have been expanding, their venues are finding their way in to well-connected traffic-hub locations, making it easy for their clients to get to and from downtown.
UP co-working spaces are generally geared towards startups, which means they are more conscious about places where younger start-ups are more likely to be. For example, UP collaborated with the HCMC University of Technology for a co-working space and incubator, where they also offered legal advice and HR-sourcing services.
Looking forward, the CWS movement in Vietnam will continue to expand in terms of supply and niche-offerings to their targeted tenants. Foreign CWS operators are aggressively trying to find space, especially in Grade A office buildings as well as in upscale Grade B buildings in prime central business districts, in order to establish both their branding and market shares within Vietnam.
HCMC and Hanoi are both neck and neck in terms of demand. Operators reported a general 75-80 percent average occupancy rate as of April 2018. This high level of demand as well as the fact that the market is still relatively new compared to counterparts in other APAC nations, create opportunities for upcoming merger and acquisition activities among local and foreign co-working spaces.
Image source: CBRE
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