SINGAPORE (Mar 13): The Great Room’s co-working space in Singapore’s Centennial Tower doesn’t look like your average office. The floor is marble, the finishings are brushed gold and there’s coconut water in the pantry fridge. It’s a step up from the sector’s more utilitarian offerings, and the pricing reflects that.
Co-founder and Chief Executive Officer Jaelle Ang is betting her clients can afford to spend even a bit more. The Great Room Offices Pte has just signed with Raffles Hotel to open its fourth location in the city. The first co-working space in a six-star hotel, it will occupy 15,000 square feet in one wing when the iconic property reopens after a major refurbishment later this year.
At The Great Room’s existing Singapore locations, membership for a dedicated office (as opposed to a hot-desk pass) starts from $2,500 a month. Ang says that’s about 20% higher than WeWork Cos., but that customers enjoy a 40% uplift in terms of other things like privacy, security, acoustics and quality of fit-out. Raffles will be more expensive again.
“We’re not targeting the 18-year-old entrepreneur, we’re targeting the 45-year-old who’s had a successful career and is now starting their own business,” she said. “Those sorts of people can’t have a ping pong table in the office or be seen in a makeshift space. They’re happy to pay extra for a premium working environment.”
The Great Room is managing to attract a blue-chip clientele. HSBC Holdings Plc took 70 seats in One Taikoo Place in Hong Kong for one of its growth and innovation project teams and plans to expand that to around 150 over six months. The firm’s space in Bangkok’s Gaysorn Tower, meanwhile, hosts part of JD.com Inc.’s workforce and restaurant booking app Chope’s Thailand team.
Ang said The Great Room was close to signing tenants for its Raffles location, with family offices, private equity and venture capital funds showing particular interest. “They can afford it and it’s a once-in-a-lifetime chance to associate with such a landmark building,” she said.
Singapore’s flexible workspace stock has almost tripled since 2015 and as of June, co-working companies were among the top five occupiers of premium and grade A office space in the central business district, Colliers International Inc. said in a September report. A growing number of multinational corporations are inking flexible workspace deals to complement their traditional leased office space, the report found.
“The new co-working and serviced office brands focus on building a community: a membership comes with space allocation along with other services and networking opportunities,” Bloomberg Intelligence real estate analyst Patrick Wong said. “But we’ve seen robust expansion in major cities in Asia over the past year, and I think there’ll be some market consolidation in 2019.”
In Singapore, The Great Room is on the smaller end of the spectrum. According to Colliers, it’s No. 7 by portfolio size, dwarfed by IWG Plc, the world’s biggest provider of serviced offices and owner of the Regus brand, and WeWork. It also faces competition from other homegrown outfits, like No. 3 operator JustGroup Holdings Pte and The Work Project Management Pte. The Work Project also shares a financial backer in CapitaLand Ltd.
“The Work Project is doing things differently by delivering amenities to a wider building instead of just a rent-arbitrage project,” said Jonathan Wright, director of flexible workspace services at Colliers in Hong Kong. “Great Room is in a good position to capture corporate demand, but if you’re looking for something different, then you should look at the Work Project.”
CapitaLand’s venture capital arm C31 Ventures led a $5.5 million Series A funding round for The Great Room in 2017, while Temasek Holdings Pte-backed InnoVen Capital and UOB Ventures extended a $10 million debt facility last year.
Ang said The Great Room is starting to prepare for a Series B round, but that scale isn’t the sole goal.
“For us it’s about controlled growth,” Ang said. “There are a lot of players fighting for market share but my metrics are never occupancy or number of locations. They’re positive Ebitda, or revenue per available desk. It’s a race to the bottom otherwise.”