By: Ms Hoang Dieu Trang – Senior Manager Commercial Leasing Savills Hanoi
The co-working sector, which has evolved out of the more widely known serviced office market, has been growing exponentially in Vietnam, especially in Ho Chi Minh city and Hanoi and is now catching on in other cities like Da Nang, Hai Phong, Ba Ria Vung Tau etc. But what is behind its popularity and is its growth sustainable?
Serviced offices are by no means a new concept. They originally evolved from hotel business centre as a response to the inflexible nature of the traditional commercial property lease, which many start-ups and small businesses feel is incompatible with the needs of a growing business in a volatile world. Generally companies rent space by the desk on a weekly or monthly basis, with the flexibility to add on extra services as required. Some offer more of a club-type arrangement where you pay an annual fee to use any of their centres globally. Others offer a memberships model where as well as space, members have preferential access to third-party providers and advisers, events and networking opportunities.
Serviced offices are costly however. The flexibility it offers comes at a price. Utilities costs are often 2 – 3 times higher, plus add- on services such as café, hotel etc. Some operators charge ten times per square metre more than the rate for traditional office lease. Some business travellers and international companies with short- term demand for small office space may find the ability to choose whether to occupy the space on a week-by-week and desk-by-desk basis an attractive reason for paying these higher costs. The more budget conscious smaller and leaner run businesses often find them unaffordable for longer term arrangements. The co-working concept then emerged as a more economical solution where a diverse group of start- ups and independent professionals work in a more open and communal settings. Facilities are cut back to office essentials such as informal desk space, internet, IT services and possibly refreshments.
For small business co- working is more cost- efficient than traditional commercial lease where leasable area í much larger than their office needs. Setting up office in residential apartment, which is used to be an alternative office solution, has recently been prohibited in Vietnam, driving more demand toward co- working sector. For freelancers, unlike traditional office or working at home, co- working spaces offer their members the choice to either work independently in privacy or to socialise, exchange ideas with like- minded people. Many professionals believe such environment improves their work performances, making co- working models an increasingly popular choice for more economical and temporary office space.
For more information, click 21082017 – The potential for coworking space in Vietnam- EN and 21082017 – Tiềm năng của mô hình coworking tại thị trường Việt Nam – VN
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