KUALA LUMPUR: Coworking space providers in Malaysia are gearing up to adopt a different business model and growth strategy to achieve higher occupancy rates and raise confidence in the industry, shaken by coworking space giant, WeWork's, bankruptcy filings in the US and Canada.
On November 7, WeWork, with a presence in more than 600 locations in 119 cities, filed for bankruptcy.
According to news reports, the New York-based company has listed assets and liabilities ranging from US$10 billion to US$50 billion.
Coworking space players Business Times spoke to however are unfazed by the news insistent that there is demand for coworking spaces in Malaysia and room for growth.
WORQ co-founder and chief executive officer Stephanie Ping saidMalaysia's coworking space penetration at one per cent, is significantly below the Asian average of three per cent, signalling significant growth potential.
She expects 30 per cent of office needs will be for flexible spaces, driving the market up to RM6 billion.
"As companies seek alternative solutions to the rising cost of operating in Singapore, MNCs seek to establish more of their operations and teams in Malaysia. "WORQ sees an opportunity to attract foreign investment, contributing to the nation's economic growth.As the global work-from-home experiment has spurred remote work and foreign companies are bringing jobs to our shores, this will reinforce Malaysia's standing as a regional business hub. "WORQ remains committed to meeting market demands and fostering a dynamic and thriving workspace environment," she told Business Times.
In response to WeWork's recent bankruptcy announcement for the US and Canada, Ping said despite WeWork's assurance of ongoing operations, there is a growing sentiment within the business community that this development may create a void in the industry, potentially to be filled by the next formidable player.
"We view challenges faced by individual operators, such as those seen with WeWork, as part of the industry's maturity cycle. Only the most resilient operators will thrive and drive the industry forward," said Ping.
For now, WeWork's bankruptcy announcement is just for the US and Canada.
The filing allows WeWork to keep operating while it works out a plan to repay its debts.
In a statement, the company also said it would renegotiate nearly all its leases and withdraw from 'underperforming' locations.
Industry players believe WeWork's situation in the US and Canada will not have any ripple effect in Malaysia, as the company's presence in the country is small.
WeWork only has two outlets locally, one in Mercu 2 and one in Equatorial Plaza, and it is learned that both locations are still operating as usual.
Paramount Corporation Bhd executive director and deputy group chief executive officer Benjamin Teo believes the demand for coworking space in Malaysia will continue to grow due to changes in work style requirements: office first, hybrid work next, and then flexible workspaces or coworking.
"We are also seeing greater adoption of coworking spaces by corporations and larger companies, not just freelancers and small firms."As an emerging industry, players in the coworking industry continue to look for the sweet balance that promotes the needs of tenants' businesses and, through that, is profitable for shareholders," he said.
Paramount's workspace solutions provider, Paramount Coworking, offers a network of coworking spaces in the Klang Valley bearing the brand Co-labs Coworking.
Co-labs Coworking's members include freelancers, entrepreneurs, SMEs and multinational corporations, such as Brandlah, Ogilvy Malaysia and Osram Malaysia to name a few.
Teo said coworking is attractive because, aside from lower upfront financial commitments, setting up an office space (that could be better used for the actual business) is easier for both upscaling and downscaling.
Coworking also lowers office operations costs, including meeting room maintenance, high-speed internet, pantries, reception services, digital security, and even toilets.
From a cultural perspective, Teo said coworking fulfils the new work expectations, including results versus presence, meaningful engagement, wellness, fun, and collaboration.
"We see growing demand in the Klang Valley and are expanding Co-labs Coworking's portfolio in 2023 by adding an additional 52,000 sq ft, or 45 per cent more to the 115,000 sq ft we had in January this year. "In terms of locations, we are expanding one space and opening two new locations," he said.
Teo said that, like any other industry, there will always be success stories, and there will also be experiments to make the business work better for those who did not get it right the first time, or even the second and third time.