Flexible office space provider The Executive Centre grows Singapore footprint
/ EdgeProp Singapore |
Salnikow: We match our growth to our clients (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - In early October, flexible workspace provider The Executive Centre (TEC) unveiled a new extension to its space at Ocean Financial Centre — the 43-storey Grade A office Tower owned by Keppel REIT in Collyer Quay.
TEC, which already occupies about 44,000 sq ft across levels 37 and 40 at the building, has now taken up an additional floor. Located on level 4, the 15,000 sq ft expansion adds 295 workstations to the existing 550 at the centre. Paul Salnikow, founder and CEO of TEC, shares that the extension achieved a committed occupancy of 93% even before its official opening on Oct 6.
This signifies strong demand for TEC’s offering in the city-state, where its current average occupancy rate stands at 95%. Today, TEC operates six centres across Singapore totalling 172,417 sq ft. Its centres are all located in the Downtown Core area, including a flagship centre at One Raffles Quay’s North Tower with over 75,000 sq ft located at the top two floors of the 50-storey building. Its other centres are located at Frasers Tower on Cecil Street, Marina Bay Financial Centre Tower 1 on Marina Boulevard, Six Battery Road in Raffles Place, and The Gateway West along Beach Road.
The company has plans to further expand in Singapore, with two new centres in the pipeline. In January 2023, it will open a centre at Capital Square, located on Church Street. The roughly 29,000 sq ft centre, located on a single floor, will accommodate 430 workstations. Meanwhile, another centre at Singapore Land Tower, adjacent to the Raffles Place MRT Station, is slated to open in 2024. Spread across three floors, it will encompass some 32,000 sq ft and 490 workstations.
According to Salnikow, the push for growth in Singapore reflects the significance of the market to TEC’s global operations. “Singapore is our number one market outside of Greater China,” he asserts. TEC, which is headquartered in Hong Kong, currently has over 170 locations across 34 cities.
Premium offering
TEC has about 41,000 members across its entire network which spans Greater China (which encompasses China, Taiwan, Hong Kong and Macau), India, Australia, South Korea, Japan, Sri Lanka, Vietnam, Manila and the United Arab Emirates.
The bulk of memberships come from MNCs that make up over 80% of TEC’s client base, says Salnikow, predominantly from industries such as financial services, insurance and tech.
These large companies are increasingly turning to flexible solutions as a result of the pandemic and changing work patterns, Salnikow says. Leasing office space from a provider such as TEC allows companies to retain the flexibility to expand or contract as it needs to — a factor that has become more significant in light of ongoing macroeconomic uncertainty underpinned by rising interest rates, an inflationary environment, and geopolitical concerns. “Hedging against that uncertainty is really important,” Salnikow remarks.
The lounge area at The Executive Centre in One Raffles Quay (Picture: The Executive Centre)
To that extent, TEC aims to serve this particular segment of clients. Its core offering, which makes up 70% of its global revenues, revolves around private offices which comprise workspaces tenanted by companies that sign leases with the firm.
While TEC also offers more conventional co-working plans, where members can pay a subscription fee to access its shared spaces, this makes up only about 5% of the company’s revenues, while the rest are generated from other products offered, such as meeting and event spaces for hire as well as support services.
When it comes to its centres, TEC focuses on offering a premium product in prime locations, befitting its clientele of large corporates and MNCs. For example, in Singapore, all of TEC’s workstations are kitted out with Herman Miller chairs and 9AM height-adjustable desks, while at locations such as Ocean Financial Centre and One Raffles Quay, members also have access to coffee bars manned by professional baristas. Salnikow likens TEC’s offering to the business class section of a passenger plane. “You pay more but the seats are bigger and the meals are better, everything is a better experience,” he says.
Growing profitability
TEC’s growth in Singapore follows a steady spate of expansion across the Asia Pacific region. Last year, the firm opened new centres in Hong Kong, Manila and Ho Chi Minh City. It also announced plans to set up more centres in India, adding to the twenty-nine it currently operates there. According to Salnikow, TEC is currently expanding its capacity at a rate of 20% per annum y-o-y.
He asserts that the robust growth comes on the back of client demand, underpinned by the strong partnerships it maintains with its members. Given that the bulk of its clients are MNCs that operate in multiple locations, TEC endeavours to grow where its clients need them to. “We match our growth to their growth,” he explains.
The co-working space at The Executive Centre at Ocean Financial Centre (Picture: The Executive Centre)
This approach, he says, has allowed TEC to grow without compromising on profitability. The firm is on track to hit an ebitda of US$50 million ($70.7 million) this year. “We’re growing our profitability by about 25% per annum,” says Salnikow.
His goal for the firm is to continue generating healthy profits, supported by thoughtful expansion that is fuelled by solid demand from clients. This is in line with the company ethos of evolving with its members. “We satisfy our clients to generate revenue and profits, and as they grow, we grow with them,” Salnikow concludes.
Check out the latest listings near Ocean Financial Centre, One Raffles Quay, Frasers Tower, Marina Bay Financial Centre Tower 1, Six Battery Road, Raffles Place MRT Station
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