Shared offices is rising trend in commercial space
The concept is catching on in Korea.
WeWork launched a shared workplace service in Seoul right next to Samsung Electronics’ Seocho headquarters in Gangnam, southern Seoul, in August and is set to open a second branch in Euljiro, central Seoul sometime in the first half of next year.
Hyundai Card, the nation’s fourth-largest credit card issuer - noted for offering trendy and fashionable services to subscribers - is opening its own shared office next month.
Miguel McKelvey, co-founder and chief creative officer of WeWork, said in a meeting with the Korean press at the WeWork office in Gangnam on Tuesday that he is “confident we will continue to grow” in Seoul, vowing to add more branches across the city in coming years.
“The Gangnam branch has filled almost 90 percent of the space in just three months,” he said,” which is quite fast among all branches worldwide.”
WeWork has rented 10 floors in Gangnam to accommodate up to 1,000 people and the Euljiro branch will house triple the number of people, to become the second largest among all WeWork branches worldwide.
Founded in 2010 by Adam Neumann and Miguel McKelvey in New York, WeWork provides its members shared office space, a sense of a community, events and benefits - all for a monthly fee. The company rents space from landlords, turns it into a well-designed workspace with a communal feel and rents it out at higher prices to start-ups as well as small businesses and freelancers.
Each WeWork branch is dubbed a “community,” and is run by community managers with varying career backgrounds, from hospitality to consulting. Members may network and seek opportunities for collaboration and new businesses through parties hosted by the community. The space mostly caters to start-ups that have graduated from incubators or accelerators with insufficient capital to run their own office. WeWork says about 70 percent of its members are working with each other.
“For start-ups that have varying number of employees and locations, a co-working space serves as an effective tool,” said Lee Seung-yoon, CEO and co-founder of Radish Media, who has rented an office at WeWork Gangnam. “Being able to use WeWork branches in other parts of the world such as San Francisco is another upshot.”
The concept of shared offices isn’t entirely new in Korea. One form of the idea began in the early 2000s in the form of rent-based business centers.
The Executive Centre (TEC) from Hong Kong entered Korea in 2001 with four locations in posh buildings such as the Seoul Finance Center in Gwanghwamun, central Seoul, Gangnam Finance Center in southern Seoul and the International Finance Center in Yeouido, western Seoul. Due to the hefty cost of between 500,000 won and 1 million won per seat, depending on the view, and high-end services like translation, interpretation and accounting, TEC is compared to business class on planes.
WeWork is more akin to economy class with the “community” idea and its business is booming. Other companies in the industry include SparkPlus, Space 332, Rehoboth, Regus and Toz.
“WeWork has brought a positive change in the serviced office industry in Korea,” said Joann Hong, director of Savills Korea, a branch of a global real estate services provider based in London.
Of the 21,493 square meters of shared offices in the so-called “prime areas” of the Korean capital - central Seoul, Yeouido and Gangnam - new entrants to the industry accounted for 20.8 percent last year, Savills Korea data show.
Hong says the portion of shared offices doubled this year from last year and will continue to grow.
In a sagging economy, small companies and start-ups are opting to use shared offices to save costs. Landlords losing tenants are tackling the vacancy problem by renting their buildings to shared office providers.
In New York City, there were at least 180 co-working locations as of June, up from about 25 in 2009, according to Newmark Grubb Knight Frank, a real estate service.
Inspired by the early success of WeWork in New York, Fast Five, a Seoul-based start-up, was quick to bring the co-working space concept to Korea in January 2015. Its rented space is much smaller than WeWork’s - its first branch in Seocho, southern Seoul can accommodate only 140 people - but its CEO and co-founder Kim Dae-il says the number of its members is close to 1,500 - double the figure for WeWork - and its strength lies in “localized service.”
“Considering the personality of Koreans, who are not used to working in an open space, we offer blurred glass for each office. The size of the space per office is bigger than that of WeWork,” he said.
By comparison, McKelvey, himself an architect, contends that WeWork is different from other operators in that it prioritizes the way that space affects people’s emotions.
“There are millions of office spaces but they are mostly not friendly to human beings,” he said. “We wanted to create space that makes people generally happier. Fun, art, color and vibe generate positivity that people share with each other.”
Kim of Fast Five cites simpler and faster communication as another competitive edge for his company, given that a large portion of management decisions at WeWork are controlled by its headquarters in New York.
Fast Five, a subsidiary of Fast Track Asia - a company established by former and present entrepreneurs and venture capitalists that hatches start-ups - now runs five branches in southern Seoul and is set to open its sixth in Samseong-dong in mid-December. Kim said vacancy at each branch accounts for less than 1 percent of space.
“The co-working space business is in its early stage and domestic players - thanks to their superior understanding of the local market - are expected to make it in the long run,” he said, citing low barriers in the market. “The winner in the market will be determined in the next two to three years.”
BY SEO JI-EUN [email@example.com]