The growth of co-working spaces in the office market
By: Eric Wong Chon Lap
For most occupiers in the Phnom Penh office market, the typical way of leasing office premises is a traditional lease with options to renew and the tenant fitting out the space. Multinational firms and new local startup firms, however, are increasingly looking for flexible lease terms as real estate costs continue to be one of their major concerns. In some cases, it is easier to get third parties to build, design, and operate the spaces, rather than companies doing it themselves. These co-working spaces can also provide flexibility for companies to accommodate fluctuation in space requirements in the future.
The current pricing being offered by co-working space operators nowadays in Phnom Penh is very competitive. Because of this, the cost combined with flexibility is making leasing from third parties more attractive, than leasing space, fitting them out, and managing their own premises. At the same time, many of the landlords or co-working space operators want to revolutionise the way occupiers source office accommodation. They want to provide office space as a service rather than a traditional lease. These co-working space operators are not just targeting startup companies, but also multinational firms. They are paying their rental as a service fee on a per desk or membership basis, rather than per square metre as a monthly lease. Co-working space operators are also providing tailor-made solutions to these companies enjoying exclusive use of the space, and not sharing it with others, making this a viable alternative to a traditional lease.
As millennials will become the largest generation of the workforce in the future and the largest demand from co-working space usage, companies should rethink their workplace quality, to make it capable of encouraging collaboration and innovation, as well as promoting the wellbeing of these employees. Co-working space operators are now one of the largest sources of demand for office space around the world, and it is a growing source of office supply here in Phnom Penh. As new co-working spaces are fitted out and come onto the market, this competition will continue to increase with landlords offering traditional office lease.
In the future, a more mobile workforce and advance in technologies are starting to reshape the business environment and transform occupiers’ approach to office space decisions. For tenants leasing large office spaces, they are also increasingly comparing the options of co-working space and traditional leases when they decide to take new premises. However, co-working spaces will definitely continue to be an emerging source of office demand in Phnom Penh in the coming years.
