Co-working spaces sector posts model growth

Published October 29, 2020, 6:30 AM

by Bernie Cahiles-Magkilat

Albeit growing at slower pace, the co-working spaces sector has expanded modestly during the tough lockdown period as against a robust growth last year, indicating it has a role to play in the country’s economic recovery.

This finding is part of the Oxford Business Group (OBG) series to assess the COVID-19 economic impact assessment on “Covid-19 and the Philippines: Could co-working spaces fill the void as firms decentralize?” The series focused on specific sectors in the markets that OBG covers to give clarity to the situation on the ground.

Based on this series, co-working spaces provider WeWork Philippines said its enterprise memberships expanded by 10 percent between the lockdown period -March to July- as large firms made flexible alternative arrangements for employees. This is less than half of the 25 percent expansion seen by the company last year.

Lars Wittig, country manager of Regus and Spaces by IWG, told OBG that the pandemic has led to an emphasis on flexibility in terms of workstations and working-from-home solutions.

“Even before the outbreak of COVID-19 the co-working segment was booming. When the pandemic is over, people will no longer want to go to crowded downtown areas and, as such, suburban and provincial areas will see the most significant growth. At the same time, many large companies are looking to complement headquarters with satellite offices near employees’ homes – a trend that is likely to benefit co-working spaces,” said Wittig.

“In the Philippines, people want to work near home, but not from home,” he added. This is because, he said, the internet connection at home is often poor, and it is not always easy to carve out a dedicated work space amid the noise from the neighborhood.

Despite the slowdown in growth, Jet Yu, founder and CEO of commercial real estate consultancy PRIME Philippines, also told OBG that this tempered growth only signalled co-working spaces have a role to play in the economic recovery.

“The pandemic sparked a new trend in the Philippines – one towards working not from home, but near home. Co- working spaces are perfectly positioned to fit this market sentiment,” said Yu.

The emphasis on staying close to home has been compounded by a push by many large firms to decentralize operations and close offices. Doing so not only cuts overhead costs, but disperses staff and minimizes the viral risk that a large portion of the workforce could be exposed to.

Given this lack of suitable space at home, co-working spaces could be poised to fill the void. During the post- pandemic recovery period such facilities have aimed to enable creativity and engagement, as well as enhance continuity planning for businesses, as companies look to reorganize the workforce and cut real estate costs.

To meet social-distancing requirements, co-working spaces have reduced capacity, created buffer zones, and reinforced cleaning and personal hygiene practices.

The OBG series was also complemented by a report from multinational advisory firm Willis Towers Watson, which found out that during March, when Luzon was under its strictest lockdown, 99 percent of office-based firms in Manila allowed employees to work from home and 44 percent facilitated social distancing through minimal office staff and staggered shifts.

 The report noted that around half of companies surveyed had adopted multiple types of work arrangements for their employees.

While in many cases this shift has been essential, some members of the newly remote  workforce have faced challenges such as a lack of adequate work space and poor ICT infrastructure. This is especially important as the digital shift increased strain on  andwidth in a country where internet speeds remain behind regional peers.

The country’s average download speed for fixed broadband was 26.08 Mbps in September, compared to 226.60 in Singapore, 175.22 in Thailand and 138.66 Mbps in China, according to Ookla’s Speedtest Global Index.

OBG also cited a World Economic Forum report in April this year on worldwide changes which predicted that the Covid-19 pandemic would “catalyze sustained collaboration between the public and private sectors to increase internet access beyond the current crisis.”

However, OBG said that until that time comes, both companies and employees alike are likely to search for alternatives.

 
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