Covid-19: The ‘biggest experiment’ in flexible working

By Charlene Chin

/ EdgeProp Singapore |

May 14, 2020 5:50 AM SGT

SINGAPORE (EDGEPROP) - Justin Chen, CEO of flexible workspace operator Arcc Space, has had a front-row seat to the unfolding Covid-19 pandemic, helping him to anticipate, respond and adapt to the many twists and turns of the crisis.

Over the Lunar New Year period at end January, Chen had ensconced himself in Singapore when the number of Covid-19 cases was picking up pace in China. Singapore had only reported 13 positive coronavirus cases at the end of January.

However, Chen flew back to China in March when the number of cases peaked over there, reaching over 80,000 cases as at March 31. “There was a push to normalise our business faster [in China],” he tells EdgeProp Singapore, over a phone interview from Shanghai.

Since then, China has seen a gradual reopening of its economy, following its success to bring down numbers country-wide. On May 8, the Chinese government announced that recreational venues such as cinemas and museums would be gradually reopened, although mandatory reservations and a limit on numbers would be in place. New outbreaks in China reported over the past two months have mainly been restricted to residential compounds or hospitals.

In contrast, Singapore has seen its cases climb rapidly, totalling 23,787 cases as at May 11. The bulk of cases have largely been due to an outbreak among foreign workers, who are typically housed in packed dormitories. In response, the government has rolled out appropriate measures, ensuring that only essential services operate, and the bulk of the workforce to work from home till June 1.

“I’ve been fortunate in being able to spend time across both markets during this time,” he shares. To date, Arcc Spaces runs in three other key Asian cities — Hong Kong, Kuala Lumpur, and Yangon. “The Covid-19 situation has impacted different cities in different ways. It’s not just from the way that the governments have responded, but also how the culture has responded to the challenges posed by the pandemic,” he says.

The common breakout space at at 99 Duxton Road (Credit: Arcc Spaces)

Being able to experience firsthand how the situation on the ground was in China helped Arcc Spaces move fast in response to safety precautions in other markets. Even before Singapore upgraded its alert level to Dorscon Orange, Arcc Spaces had already practised safety distancing in its centres at 75 High Street and 99 Duxton Road, says Chen.

Elsewhere in Yangon, Myanmar’s largest city, where the reported impact has been much lower, measures have included more frequent cleaning schedules and controls in terms of access to the workspace, Chen shares. As at May 11, Myanmar has reported 180 positive Covid-19 cases and six deaths.

One of the meeting rooms at Taikang Insurance Tower, Shanghai (Credit: Arcc Spaces)

What will be the future of work?

Without a doubt, the pandemic has put pressure on many companies to adopt change at an accelerated pace. It has also forced them to rely more on remote working practices such as virtual meetings and conference calls, and forced a shift to online project and workflow management platforms.

Worldwide, Covid-19 has also taken a toll on the internet as people and businesses shift online. Internet service providers in the UK, for instance, reported double-digit increases in traffic amid its lockdown in end-March. This trend was also seen in both Singapore and Malaysia, where internet traffic surged by as much as 60% in Singapore in early April as more employees began to work from home, while Malaysia reported a 23.5% jump in higher internet traffic during the first week of its lockdown period commencing March 18.

Given that the way we work will forever be transformed by the pandemic, Chen describes Covid-19 as the “biggest experiment in flexible or remote working”. This has challenged “a lot of companies to reconsider how they allocate resources, how they plan their real estate strategy and even how they want their people to work — whether it’s a combination of remote working with in-office options or some other arrangement, he adds.

One thing experts agree on is that the Covid-19 pandemic is not expected to undermine the future of offices or dampen long-term demand for office spaces. “Offices are essential to building culture and collaboration, and in fact a number of employees crave separation between home and work life,” says Tim Armstrong, head of occupier services and commercial agency, at Knight Frank, Asia Pacific, at a digital press conference on March 31.

In the short term though, office vacancy levels are likely to rise. A flash survey of occupiers conducted by CBRE from late March to early April found that two-thirds of occupiers experienced delays to leasing decisions since the onset of the pandemic. The flexible working sector has also been hit hard, with most players cutting expansion plans.

Amid the post-pandemic recovery, Armstrong expects the hub-and-spoke model, which is typically adopted by larger firms, to trickle down to SMEs. This happens when companies maintain an office front in the CBD for its core staff, and shift backend employees to further office spaces in less prime locations, where rents are typically cheaper.

Chen is optimistic that the flexible workspace industry is in a “good position” to cater to firms’ changing office needs. “This is core to what flexible working is — being able to provide people with the options to the way they work, while also being a nexus or a community node for people to gather,” he says.

The future of work is also moving to a holistic ecosystem where facilities and spaces for events, and dining areas are housed together with an office space, adds Chen. “In the workplace, people are not just using the office as a place to work, and in the traditional sense of sitting deskbound, but there are now spaces for learning and development, networking, events, and presentations to key accounts or clients,” he explains.

EDGEPROP SINGAPORE - An open pantry helps facilitate dialogue, because people like to gather around food and drinks and mingle: Chen (Credit: Arcc Spaces)

An open pantry helps facilitate dialogue, because people like to gather around food and drinks and mingle: Chen (Credit: Arcc Spaces)

‘360 approach to the lifecycle of work’

The City in Beijing is Arcc Spaces’ answer to such a shift. Launched in 2016, it is the firm’s premium offering. The facility comprises four components: Shared office spaces; on-site events and conferencing facilities; an on-site club for c-suite executives; and Hudson, the firm’s own F&B concept. Chen’s team in Beijing comprises experts in trades spanning from F&B and events management to operations and office space management.

Chen says the concept caters for “a 360 approach to the lifecycle of work”, whether “someone is coming in the morning to get some focused work done, whether they need to have a space to actually conduct business meetings, whether they are looking to host workshops or events, or whether they need to have a flexibility around project teams”.

For example, the Beijing F&B team caters to a wide range of meal options, ranging from business lunches and dinners, to events and canapes, plus “everything in between”, says Chen.

The Hudson restaurant is Arcc Spaces’ own F&B concept in Beijing at The City (Credit: Arcc Spaces)

Impact of Covid-19

Amid the Covid-19 pandemic, Arcc Spaces’ occupancy rates in Shanghai, Beijing and Singapore have been “pretty stable” at 70 to 80%, says Chen. The firm’s clientele ranges from long-term to short-term clients, with a predominant reliance on MNCs or larger SMEs in all markets. The proportion of the company’s corporate customers — occupying a space of 10 workstations and above — currently stand at about 50%, while over 90% of clients take up more permanent arrangements, says Chen.

Although Chen admits some “clients have been asking for rent reduction or terminating their contracts earlier”, his team has also been fielding 15 to 20% more enquiries “because of growing concern or the need for flexibility”, a result of rolling out a dedicated recovery package with flexible components.

To understand how clients have been impacted by the crisis, Arcc Spaces has had one-on-one dialogue sessions with customers to offer them bespoke solutions. “This can be about downsizing their requirements or making it a little bit more flexible through staggered rentals or take-ups, whether its changing their product offering completely from one where its a flex desk product to one where they are working virtually and we provide them with a network solution instead,” he says, explaining that the last item typically involves providing administrative support or call answering and redirecting services.

Arcc Spaces had originally planned to launch its Singapore flagship project in April. Located at One Marina Boulevard, the fourth facility here will span 19,000 sq ft on the 20th floor, with sweeping views across Marina Bay and the CBD.

EDGEPROP SINGAPORE - The reception lounge at Bund Finance Centre, Shanghai (Credit: Arcc Spaces)

The facility will be a showcase of the best features and practices drawn from Arcc Spaces’ rich vein of projects and experiences elsewhere. One aspect Chen and his team have worked on is a “greater allocation towards events and programming, he says. “Such spaces should not just be a big empty room, but actually be paired with hospitality elements, like an open kitchen or pantry. This helps to facilitate dialogue, because people like to gather around food and drinks and mingle,” he explains. “There has been a lot of intuition around the way things are planned,’ adds Chen.

But as far as plans go, the pandemic has upended propositions globally. Arcc Spaces has had to postpone its launch till July. Beyond that, there is no denying that the Covid-19 pandemic has hastened the transformation of the workplace. Change in office space is only at its cusp and the reality is that it will very soon be “less of a place to just park some desks”, says Chen.

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