Covid-19 may change the way we work forever.
Depending on which city you’re based in, you’ve probably been working from home for at least two months. Chances are, you’ll continue to work remotely for the foreseeable future as companies figure out how they can resume their businesses while instituting social distancing measures.
For sure, workers will return to a different office environment. But beyond needing to regularly check their temperatures and constantly wear face masks, their work desks will look different as well. Open-plan co-working spaces, for instance, are now making room for partitions.
For Singapore-based flexible workspace provider JustCo, this means reducing the number of seats and spacing out furniture in common areas and meeting rooms, a move that could impact revenue. Meanwhile, Jakarta-based CoHive is rolling out more private offices across its properties.
Even as office landlords implement design changes post-pandemic, many companies including tech giants Facebook, Google, and Twitter are allowing their employees to telecommute using video-conferencing platforms and other office productivity and collaboration tools for a prolonged period. What this means for companies is that they can lease fewer office spaces or give up their leases entirely.
This paradigm shift in the way companies view their offices has already weighed on commercial real estate rentals across Asia, with transaction volumes slumping 51% in Q1 2020, according to a report by real estate consultancy firm Knight Frank. Office leasing activity dropped 73% in April as companies around the region had their employees work from home, the same report revealed.
Combined living, working spaces
The outlook for the office rental market looks grim, particularly in Jakarta, where several startups are downsizing or closing shop. Those that can carry on with their businesses are giving up their office leases in the central business district and moving their employees to co-living spaces that provide remote working facilities.
One such company is startup consultancy firm Trident Global Services. CEO and founder Manu Asvalyan says he ended the company’s co-working space arrangements in the Jakarta CBD area, as the offices became inaccessible to his employees after the government imposed a lockdown in March.
“Our deliverables had to happen, but our teams couldn’t travel to the designated office spaces,” Asvalayan says. “So the only available option for us was to work from home. Wherever the team is, they can still work together.”
Instead, Trident is currently renting five three-bedroom apartments in a co-living space operated by Flokq outside Jakarta’s CBD. The units are occupied by up to 15 IT engineers from India who are working on several Trident projects in Indonesia. To make the apartments conducive as workplaces, Flokq refurbished and rearranged the units to accommodate extra desks and other office amenities such as projectors.
“We have to work hard and perform better during this pandemic to ensure that our projects don’t end up being terminated,” Asvalayan says, adding that consolidating co-living and co-working spaces together has helped lower the company’s overhead costs by as much as 35%.
Anand Janardhadan, founder and CEO of Flokq, is indeed seeing more startups consider leasing out combined co-living and co-working spaces from his company – it’s getting many inquiries. So far, the startup has booked four to five clients in these combined office and residential spaces.
We don’t have to pay double rent.
Another client that has taken up such an arrangement is Buy and Ship, a direct-to-consumer logistics services provider based in Hong Kong. “By leasing a combined co-living and co-working space, we don’t have to pay double rent,” says Sheldon Li, Buy and Ship’s founder and CEO. “Work is also more efficient that way.”
Meanwhile, YOLOlive, a co-living space operator in Singapore, has started marketing its properties similarly. One of its marketing emails reads: “Perfect bedroom to work from home.”
“We do see an increasing demand for the living space to function as a work space too,” says YOLOlive co-founder and CEO Loo Kian Wai. With Covid-19 likely to be around for a while, it could influence work habits in the long term, leading to permanent demand for work-conducive co-living spaces, he adds.
Nobel Group, a property developer and investor in Australia and Indonesia, is taking the concept further. It is developing an apartment block in Kemang in South Jakarta, about 10 kilometers away from the city’s CBD, that combines co-living and co-working spaces in a seven-story building, says Akash Mulani, the company’s director.
Slated to be completed in 2022, the project will have 100 units of two- and three-bedroom apartments, with the first two levels housing co-working facilities for use by the building’s residents. Flokq will lease the entire block from Nobel Group and operate it as a combined co-living and co-working space. Rival provider CoHive, which operates co-living and co-working spaces across Indonesia, says it is also working with developers to incorporate office amenities in their apartments.
Despite the emerging trend of combined living and working spaces, Mulani believes offices won’t go out of fashion. “The office is just evolving. I don’t think it’s dead at all. The overriding feeling is people have missed their offices. The collaboration that offices allow is unparalleled,” he says.
Anthony Couse, CEO for Asia Pacific at real estate consultant Jones Lang LaSalle (JLL), agrees. “We think offices will remain central to daily business life. Looking ahead, we believe that this is a resilient sector that will continue to draw long-term investor interest and confidence.”
The workplaces of the future will be different as organizations reevaluate how their offices are designed in the wake of this pandemic, a recent JLL report predicted.
Offices will shrink as companies decentralize their work spaces into smaller facilities across different locations and as a certain percentage of employees work from home for a prolonged period, the report reveals. Technology will drive these workplace changes, providing the infrastructure that connects the workforce of the future.
Expansion plans on track
Reflecting confidence that demand for co-working spaces will remain, JustCo says it will still proceed with expansion plans, but the timeline for these projects will be pushed back since many countries around the region are still in lockdown.
“We are confident that coworking will still play an important role as companies are becoming more aware than ever of the need for flexible working solutions,” says Brandon Chia, JustCo’s vice president and head for Singapore and Indonesia.
The company announced in February that it plans to expand across 11 cities, including Bangkok, Jakarta, Melbourne, Seoul, Shanghai, Singapore, Sydney, and Taipei.
Similarly, CoHive says it believes demand for co-working spaces will be sustainable even after Covid-19. “We are optimistic that the demands of the office space would not be changed fundamentally,” says CEO Jason Lee. People believe that “physically interacting with one another” is the most productive way to work, he added.