SINGAPORE (EDGEPROP) - These days, Singapore-based real estate concept developer Arcc Spaces has a presence in six key Asian cities. But when it opened 17 years ago, the company’s chief executive Justin Chen remembers a very different market.
Back then, co-working space operators like Regus, Servcorp and The Executive Centre were in their nascent stages, and the requirements were “much more transactional”.
“It was much more about having a least arbitrage business where people were just taking up smaller spaces, something that was flexible for them,” Chen recalls. “In those days, you actually had to educate people what serviced offices were. You know, we had many a conversation where we had to introduce by proxy to service apartments being a similar kind of model and people have to be convinced that this was a viable alternative to a traditional office space.”
But workplace needs have evolved and Chen says the idea of flexible working has become “very integrated into” the entire market now.
Meeting room at the space in Pavilion Tower, Kuala Lumpur (Credit: Arcc Spaces)
As at June 2019, about two in five of all the office buildings tracked by commercial real estate firm CBRE Research has some sort of flexible office component. By 2030, it should be no surprise to see at least three out of five buildings with a flexible office component, CBRE notes in its flagship Singapore 2030 report.
The rise of co-working was embraced by landlords as operators were “taking up huge swaths of space and willing to pay market rents during the last down-market cycle”, adds CBRE. From 2017 to 2019 – with the market having recovered and spurred by rising competition posed by flexible space operators – landlords and developers are now entering the fray at a more active level.
As of 3Q2019, CBRE data highlighted that privately owned co-working operators accounted for almost 37% of the market share while 44% were taken up by privately owned serviced office operators.
But as the scene heats up with more competition, change is also necessary.
Lounge at the Bund Finance Center in Shanghai (Credit: Arcc Spaces)
As far as Chen is concerned, his company has been evolving to keep up with changing consumer needs. Back in 2013, Arcc Spaces became one of the few companies to “really catered to community-oriented requirements” as they recognised that even though people wanted to have a sense of community and network with like-minded individuals, there was still a strong need for something that was “structured” and augmented with a range of services that were “more sophisticated.”
Chen: There’s always been a desire for us to be back in Singapore (Credit: Albert Chua/ The Edge Singapore)
To be sure, these demands are aligned with the company’s vision. Under its parent group Arcc Holdings, which have established a firm base of over 30 years in Singapore, the shared workspace arm Arcc Spaces focused on one thing – creating a space and a sense of community that will have clients coming back for more.
Now, Arcc Spaces has over 20 properties in six key Asian cities: Singapore, Kuala Lumpur, Beijing, Shanghai, Hong Kong and Yangon where they house tenants that include teams from Alibaba Group, Airbnb, Swarovski, Fendi, Starwood Hotels & Resorts, BP, and Clarks. In Singapore, Arcc Offices is located at Suntec Tower Two and One Marina Boulevard.
Recently, Arcc Spaces unveiled two new ventures – The Co. and The City. Chen says the new offshoots were spun out to allow for more freedom to explore a grassroots approach to co-working and community building.
Breakout space at The City Society (Credit: Arcc Spaces)
In Singapore, The Co. occupies an entire eight-storey building at 75 High Street while another space is at 99 Duxton Road. This characteristic is also similar to the Kuala Lumpur arm of The Co., which is housed in a refurbished bungalow in the affluent residential district of Bangsar. Accredited by the Malaysia Digital Economy Corporation (MDEC) as the first digital hub in Malaysia, The Co. Bangsar runs innovation programs for companies like Maybank and Maxis.
The Co.'s offices in Singapore are located near its clients, Uber and Spotify. Both companies have used the spaces to hold innovation programs for its employees, says Chen. In 2016, The Co. also played host to the DBS HotSpot Pre-Accelerator programme as well.
“There is a desire from corporates to have that unique perspective,” Chen claims, adding that The Co. was created to fill in that gap. “We’re trying to break out of the typical mould. Over time, I think our coworking business has transformed itself in a way to cater a lot more to kind of these programmatic needs, so it’s really looking at how can we support a lot of these corporates in terms of giving them access to talent, connections, and learning and development [opportunities].”
The City was launched in Beijing in 2016 and is decidedly more upmarket (Credit: Arcc Spaces)
The City, on the other hand, was launched in Beijing in 2016 and is decidedly more up market. Targeted at C-suite executives – the brand also features a private members club called The City Society where membership is strictly by invitation. Chen says The City “encapsulates the idea of building up a holistic ecosystem around work”, catering not just to the needs of a company or a working individual during work hours but also after dark.
Since Arcc Spaces entered China in 2006, occupancy rates have been consistently over 80%, says Chen.
“We’ve actually established a lot of working relationships, not just with a lot of our long-term customers that have stayed with us for a whole decade, but also with all the brokers and landlords in the markets,” he adds.
Hudson restaurant at The City, World Financial Center, Beijing (Credit: Arcc Spaces)
In 2019, it acquired its latest mainland property – a 26,000 sq ft space on the ninth floor of Taikang Insurance Tower in Shanghai’s Pudong Financial Square.
When asked why a Singaporean company has focused less on properties here, Chen says: “I think it’s because the opportunities overseas have presented themselves in a way that they were a lot greater. I think that’s what has been driving us to tackle those because I think that requirements then were growing as a lot of foreign companies were first entering into China looking to establish a base.”
Early on, armed with the knowledge they have accumulated from their work here, the company decided to leverage on that and export their expertise overseas. This was also why they ventured into Yangon and Malaysia, he adds.
“I think that’s one of the main reasons why we kind of took advantage of that window of opportunity to enter into these markets much earlier than maybe some of the newer competitors, “ says Chen.
The business lounge at Taikang Insurance Tower, Shanghai (Credit: Arcc Spaces)
It was only recently, after realigning the overall business with the upcoming trends in the workplace and doing “a lot more soul-searching” has it reignited a desire to re-establish their presence in Singapore. This will be achieved with the refurbishment of The Co. at 75 High Street, where a facelift can be expected soon.
“This project was launched over 10 years ago, so I think as Arcc Spaces, we just haven’t had a representative project in Singapore for a good amount of time. It’s something of a homecoming for us,” says Chen.
“There’s always been a desire for us to be back in Singapore. We’ve always been looking for the right opportunity.”
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