Co-working spaces expanded quite rapidly throughout 2018, but in 2019, due to market uncertainties, shifts in the sentiment of investors, as well as new strategies, the expansion of co-working spaces began to slow down.
The Executive Centre (TEC), which has been in the market since 1994, offers a variety of high-end flexible workplace solutions – from exclusive spaces catering to large enterprises, to shared workspaces with a flexible approach to work. In this month’s issue of the Office Insider we meet with Lucy Liu, Managing Director for Hong Kong, Macau and Taiwan.
With the current market conditions and outlook, what are some of the challenges TEC is facing this year?
For now, it’s been mainly the lack of supply in terms of Grade A buildings, which is our challenge for expansion. We are currently expanding across all locations globally, but expansion in Hong Kong has been slower than in other gateway cities due to the lack of vacancy.
On the other hand, a downturn in the market wouldn’t present itself as a challenge to us due to our 25 years of experience, which includes facing multiple recessions. This would be more of a challenge to some of the newer players in the market who haven’t experienced it yet. In any case, TEC will be well prepared.
How do you prepare for these?
Firstly, by using a strategy that relies on a more cautious expansion plan; and when negotiating lease terms, we make sure that both our business and our Members are well protected.
Last year we saw the rise of co-working spaces, with so much competition, how does TEC maintain itself relevant?
Quick expansion in this industry tends to be a good sign, as it demonstrates both demand and the opportunity for us to catch and engage more with the end users. This year’s slowdown in coworking expansion is because investors are more cautious. For us, the nature of our business is that we are profitable no matter who is running the centre – we’re well established and we do not lack demand. We are offering a concept that is becoming more widely accepted with everything a business needs to run – it’s a great and reliable experience, and we are thankful that our client base continues to expand.
Are you incorporating any new offerings into your spaces?
Yes of course! Over the last 25 years TEC has secured a leading position in the market, and to maintain that position we need to constantly look into current market trends and new technologies. We’ve added standing desks and touch screens to our meeting facilities, and environmental sensor systems like lights and AC systems that provide a feedback loop. We are also using other new technologies to improve the overall customer experience – though I can’t go into details as it’s confidential!
We must always be new! That’s the challenge of being number one, which means we must always try to be creative, and even though it is expensive, to fulfil this and to always give more to our Members, we do maintain an R&D team. In return, our Members stay with us, and they know that no matter what location they’re working from, they are getting the same level of satisfaction and expertise.
What relationship does TEC have with Colliers?
We cooperate with Colliers across multiple fields, and we enjoy working with them because of their professionalism and creativity – which are also some of our values as a company. Colliers has one of the most professional and creative teams we have ever worked with.
Last year Colliers helped us with two expansions in Hong Kong, totalling around 60,000 sq ft. Their approach is quite simple – their team works very closely to find suitable sites, but the way they do it is more creative and has an emphasis on a ‘customer first’ experience. Many service providers forget about this. Colliers always aims to work in tandem with the landlords and the tenants, to create a deal in which all parties are satisfied with the end result.
The Hong Kong market is very speculative, do you think the current demand will maintain your current growth momentum?
Yes! We have full confidence in the flexible workspace industry and in the Hong Kong market – it’s a resilient market and the outlook is good for TEC.
What advice do you have for occupiers planning or looking for a new office space?
Hong Kong’s office market rental is already exceptionally high, so most occupiers seek flexible terms to counteract this. In this market any flexibility is a benefit that will allow you to react to upward or downward trends, whatever the industry. Nowadays, our whole society has evolved in terms of the way we work. Thirty years ago, our business model didn’t really exist, but now one can find several types of offerings: serviced, coworking, membership centre, etc. Users have far more options while saving CAPEX, manpower, and very importantly – time. This allows professionals and occupiers to focus on what they are good at; their business.