SINGAPORE (EDGEPROP) - Kong Wan Sing, founder and CEO of homegrown flexible workspace provider JustCo works from his balcony in the mornings; and when it gets too hot in the afternoons, he will adjourn to his private study. He is enjoying working from home or WFH. “I get to spend 24x7 with my children and my wife, which is something I didn’t have the luxury of doing in the last 10 years,” says Kong. Those years were spent building JustCo into a leading flexible workspace provider with 19 co-working centres in Singapore and a total of 42 centres across Asia Pacific.
The space at 20 Collyer Quay is one of 17 JustCo co-working centres that are already opened, with two more slated to open in the second half of this year (Photo: JustCo)
With major cities across the globe going into lockdown and people ordered to stay at home in order control the spread of Covid-19, WFH has become mainstream. “It will definitely change the way people work,” says Kong. “A lot more people will embrace flexible workspace after this.”
One common complaint about WFH is the lack of social or community element, which is an important part of most people’s work life. Another pitfall is that those living in compact apartments may not have the luxury of a proper workspace or private home office, points out Kong. “Some of them have a lot of distractions, especially if they have children,” he says.
If anything, Kong sees WFH motivating people to return to the office. “All my staff complain that they can’t wait to go back to the office,” he says. JustCo has a staff of 300 today, spread across the region.
Kong: WFH will definitely change the way people work. A lot more people will embrace flexible workspace after this (Photo: JustCo)
Like other co-working operators, JustCo fell in the category of non-essential service provider under the circuit-breaker measures. Therefore, all co-working centres have to remain shut for the duration of the circuit breaker from April 7 to May 4.
However, a number of JustCo’s more than 3,000 members are companies that provide essential services, including food and grocery delivery service foodpanda, discount offer app company Fave and financial institutions. They are therefore allowed to use their workspaces in the JustCo centres, provided they get the relevant government permits, says Kong.
After this WFH stint, more companies are likely to embrace flexible work arrangement — where employees have the ability to work remotely or to shift their working hours. In turn, that could lead to a surge in demand for flexible workspace, reckons Kong.
Even before the circuit breaker kicked in, the Covid-19 outbreak had already spurred many companies to execute their business continuity plans (BCP). “We received a lot of BCP requests especially in Singapore over the past two to three months,” says Kong. “Most of them are for 15 to 20 workstations, but in South Korea, we closed a deal for up to 300 stations for a company’s BCP.”
As part of their BCPs, more companies have also considered moving their headquarters into co-working premises. “Many of these are big enterprises,” says Kong. “In the past, they were looking at just one or some of the departments. Now, they are looking at moving their entire headquarters to co-working spaces.”
For JustCo, even after Singapore had raised its Covid-19 outbreak risk level to Dorscon Orange on Feb 7, businesses had continued to chug along and its co-working centres were still buzzing. However, as more companies adopted WFH, and stricter safe distancing measures were introduced in March, occupancy was down to just about 20%, notes Kong.
With the circuit breaker in place, Kong is bracing himself for “a severe impact” this month.
On April 2, JustCo announced its own “multi-million-dollar relief package” with rebates of between 15% and 30% on its membership fees for May 2020. (Photo: JustCo)
Following the Budget 2020 announcement, the Singapore government had announced more relief measures for individuals and businesses on March 26 and April 1. The government has also made it mandatory for commercial landlords to pass their 100% property tax to their tenants.
JustCo is a significant tenant in multiple Grade-A office buildings in Singapore’s CBD and also across the region. The firm had expanded its footprint rapidly across Asia Pacific since 2015, often with the support of strategic partners and investors. These include Singapore sovereign wealth fund GIC and Singapore-listed Frasers Property, which participated in a US$177 million joint investment in 2018 to fund JustCo’s regional growth. JustCo’s other strategic partners in the region include Sansiri, one of the established listed property conglomerates in Thailand as well as Indonesian conglomerate Gunung Sewu.
Other partnerships are in the form of joint ventures and management contracts with companies such as Verizon in Singapore and GuocoLand.
Many of these investors are also JustCo’s landlords. For instance, China Square Central and The Centrepoint in Singapore are owned by Frasers Property, while Seoul Finance Centre in Korea is owned and managed by GIC.
While the landlords who are strategic partners are working with JustCo on the rental rebates and the 100% property tax rebate in Singapore, others have been less forthcoming, says Kong. “The other landlords came up with excuses and others took a wait-and-see approach,” he adds. “Some even asked us to write a report to justify getting a rental rebate from them.”
Some members, especially those in the hospitality sector whose businesses had suffered the brunt of the Covid-19 outbreak, had also approached JustCo to ask for a deferment in membership fees or early termination on their leases (Photo: Samuel Isaac Chua/EdgeProp Singapore)
According to Kong, the 100% property tax rebate from the landlord will translate to about 30% of a month’s rent. “It certainly helps,” he says. “We are not pocketing the money but passing it on to all our members.”
On April 1, the Singapore government had also rolled out a Covid-19 Temporary Measures Bill, which allows tenants whose businesses have been affected to defer their rental payments for six months until end 2020. Banks will also allow companies and individuals to defer repayment of their mortgages for six months.
“The bill has also helped, especially the deferment of rental payment for six months,” says Kong. “The idea is to share the burden together. We have zero intention of making money from this. It is to help our members.”
On April 2, JustCo announced its own “multi-million-dollar relief package” with rebates of between 15% and 30% on its membership fees for May 2020. The move was announced even before JustCo had received any rebates from its landlords. Kong says, “It’s out of our own pockets.” The move was designed to tide them over this difficult period, he adds.
The relief package will be extended to all JustCo’s members, which are a mix of individual entrepreneurs, start-ups, small- and medium-sized enterprises (SMEs) as well as multinational corporations. New members in Singapore include London chartered accountants KLSA Global; NewCampus, a start-up which conducts classes for working professionals; and Fave in Singapore, a discount offer app for food and other lifestyle services. JustCo’s members include Novartis and General Electric in Taiwan as well as business advisory firm Grant Thornton in Thailand and Expedia in Australia.
Some members, especially those in the hospitality sector whose businesses had suffered the brunt of the Covid-19 outbreak, had also approached JustCo to ask for a deferment in membership fees or early termination on their leases. In fact, businesses across all other sectors have also been hit. “The coronavirus is affecting everyone,” says Kong. “Over the next few months, we will try to work out repayment schemes for our members.”
Taiwan is one of seven markets in Asia Pacific that JustCo has a presence in, with Japan, the eighth, on hold for now (Photo: JustCo)
JustCo’s expansion plans remain intact, as does its vision to become a leading player in Asia Pacific with more than 3 million sq ft of co-working spaces by 2021. Its growth has been exponential: In 2019, JustCo grew over 150% y-o-y in terms of total space managed.
However, it will defer its expansion plans for now. “We want to hold off a bit, at least for the next six months,” says Kong. “Nobody knows how long the Covid-19 [pandemic] will persist. Like all other businesses, we need to conserve cash.”
That means delaying its entry into Japan, a key market in Asia Pacific, which will extend JustCo’s presence to eight markets, including Australia, China, Indonesia, Singapore, South Korea, Taiwan and Thailand.
Last November, JustCo announced that Daito Trust Construction, a listed construction and real estate company in Japan, was investing US$50 million in JustCo Holdings. Daito Trust invested an additional US$24 million to form a new Japan joint venture with JustCo to build and operate flexible workspace business in Japan, in a 51:49 stake between the two companies.
The additional US$74 million funding provided by Daito Trust to JustCo and the joint venture, combined with positive cash flow from JustCo’s mature centres, as well as its cash reserves, will enable JustCo to continue to fund its growth plan and benefit from ongoing consolidation in the flexible workspace sector, according to JustCo in its November 2019 release. However, that has been paused for now.
Fit-out of spaces that are already underway will proceed, after the circuit breaker is lifted, says Kong. This includes JustCo’s 60,000 sq ft of space at shopping centre The Centrepoint on Orchard Road, scheduled to open sometime in 3Q2020. The space is about 20% pre-leased, says Kong. JustCo’s space at OCBC Centre East, which occupies 45,000 sq ft across four floors, is scheduled to open in 2Q2020. Fitting out of the space will also proceed after the circuit-breaker period. The space at OCBC Centre is about 70% pre-leased.
Artist's impression of the upcoming workspace at The Centrepoint will feature JustCo’s pilot “third-generation centres”, which will see its first pay per minute (PPM) concept (Photo: JustCo)
The upcoming workspace at The Centrepoint will feature JustCo’s pilot “third-generation centres”, which will see its first pay per minute (PPM) concept, whereby members of the public can walk in and enjoy the use of JustCo’s flexible workspaces and amenities, such as hotdesking, the lounge, meeting rooms and phone booths. They can pay using the JustCo mobile app too. The third-generation centre will also house a café within, which will be accessible to both JustCo members and the public, encouraging networking opportunities.
In Thailand, JustCo is ready to launch its fourth centre in Bangkok at Amarin Plaza, located in prime Ratchaprasong district. It occupies over 4,000 sq m (43,057 sq ft), and has the capacity for 1,000 members. It is scheduled to open in 3Q2020, depending on government measures and the Covid-19 outbreak situation, says Kong.
The Covid-19 outbreak which started in China had also precipitated in lockdown measures. All public spaces including co-working centres were closed for two months. Even though these restrictions have been lifted, only 30-40% of companies have returned to their offices or workspaces at co-working centres. “The rest are still working from home,” says Kong. “Things are getting better everyday in China, although it’s not quite back to pre-Covid-19 crisis level just yet.”
JustCo sees opportunities arising from WFH over the longer-term. Kong sees increased demand for private studios within co-working spaces. While conventional office space is unlikely to become obsolete, he expects to see a greater shift towards flexible workspace. Eventually, there could be a 60:40 split between conventional and flexible workspace, he reckons.
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