Flexible Office Geo-Located

The relation between flexible office types and location in Shanghai

Abstract:

Building upon the global trends of digitalization and sharing economy, co-working spaces, serviced offices and makerspaces are the new options in the market besides the traditional office spaces. Despite their popularity, there is limited understanding on how these formats and their business models relate to their location. Understanding target users and business models interrelated with location enhance project evaluation and assessment tools for investors and decision makers. We frame this topic by taking a closer look at Shanghai.

Key words: Workplaces | Co-working | Flexible Office

[Location of Co-working Spaces, Serviced Offices and Makerspaces – Shanghai (logonLAB 2018)]

FLEXIBLE OFFICES TYPES: DEFINITIONS.

Providing diverse space solutions and renting options, co-working spaces, serviced offices and makerspaces are considered as flexible office spaces against the traditional office format. Following is how we define them based on our research findings and understanding.

Coworking Spaces. They provide office space typically in very good locations. Renting a desk, a small office or an entire floor at short and variable conditions. Public spaces like a lounge, seating areas, and coffee area are open and available to all members. The atmosphere is that of a community, sharing and communication spaces are the highlights. All-you-can-do app and cloud technologies provide easy tools to support working and networking activities.

Serviced Offices. Or business centers, they are actually the first attempt to provide more flexible options compared to traditional office spaces. Also situated in very good locations, especially CBD areas, while recently they are broadening their offer with hot desk options in open space, they generally provide small furnished offices and related business services such as reception, IT, cleaning etc. However, compared to co-working spaces, they remain more business oriented, both for the offer and as the atmosphere.

Makerspaces. As part of the innovation chain to promote mass entrepreneurship, the makerspace is the upgraded model of incubators and accelerators, with fewer criteria to comply for start-ups moving in (1). There are six types of makerspaces:

“Corporation Platform”- in order to absorb new ideas and customers,

“Angel+Incubator” – angel investment fund for start-ups,

“Open Space” – entrepreneurial ecosystem building,

“Media-based” – help to attract customers in a short period of time,

“Real Estate-based” – fewer services compared to other types, still developing,

“Vertical Industrial” – targeting towards one particular industry, often organized by government or official organizations.

The atmosphere of the makerspaces varies with the type or the single case.

DIFFERENT LOCATIONS DIFFERENT PRODUCTS.

We believe that having the city ring roads as a reference for location analysis can instantaneously communicate an overview of the city to the mind of the reader. According to our research findings, each flexible office product is more keen to be located successfully in some locations rather than others. There is no formula to evaluate a location, but a combination of multiple factors, such as public transportation accessibility, availability of talents and urban context (surrounding functions, the status of development, policies in effect, etc). For example, very good public transportation access is a necessary condition for co-working spaces and serviced offices, while it becomes a plus for other office types. Reading the outputs of the maps, we notice that co-working spaces are located in downtown, within the city Inner Ring, and especially along YanAn Road.

Serviced Office locations follow the same pattern but more closely to that of Grade A office and in CBD areas. A different paradigm emerges from makerspaces location analysis. Makerspaces are mainly located towards the Middle and the Outer Rings, with a concentration near the main universities campuses. However, their location pattern is comparatively more dispersed and distributed all over the city territory.

[Types of Workplace by location – Ring (logonLAB 2017)]

Types of Workplace by location – District (logonLAB 2017)

Looking at the same information but distributed by districts, we observe that while co-working and serviced office are mostly located in Huangpu, Jing’An and Xuhui Districts, makerspaces are scattered among all districts, with the highest number in Pudong, then Xuhui and Yangpu districts.

These results actually are related to the urban context of the districts. CBDs, university clusters, high-tech zones, etc, attract specific functions and types of people around them, and therefore types of business too. Creative people and free-lancers tend to choose city center locations, while hi-tech professions and scientists gravitate around innovation areas; financial and business experts are more attracted to CBD areas.

Shanghai Prime Locations by type (logonLAB 2018)

Target Users and Business models of Flexible Office Spaces – logonLAB 2018

LOCATION TYPES AND TARGET USERS.

The most important factor for a company or a business to choose a location is the availability of suitable human resources. Here is one of the most important factors for location choice and the link between flexible office products and locations.

Target users are different for different types of industries and businesses, and types of flexible office spaces respond to this differentiated demand accordingly.

Even though co-working spaces are often associated with free-lancers and solo entrepreneurs, it is a recent trend observed in tenants’ demographics that corporates are moving as well into co-working spaces. For small companies, choosing a co-working space is a cheaper and flexible option especially in big cities like Shanghai. For middle and big companies, dislocating departments, expanding teams or strategically place a presence in a co-working space it is a strategic solution as well. IT, PR, marketing, sales, advertising, and writing are the largest industry-related professionals hiring spaces in a co-working space.(2)

Having a business orientation, Serviced Offices are more suitable for companies who need a representative office or branch offices. For them, the outlook of a Grade A office but with renting flexibility and added business services are the priorities. Financial, business development, and trading are some of the target occupiers of serviced offices.

A different target is for maker-spaces. The innovation context and often the government background make these a different type. To be able to rent the space, start-ups apply according to their industry specification and comply with specific requirements. Data scientists, technology engineers, software developers are the most wanted profiles by innovation companies.

TYPES AND BUSINESS MODELS.

While Serviced Offices simply get their revenues from space rental, other formats of flexible offices retain different business models.

Co-working spaces not only get income from the rent of a space (which starts with a single desk, to a small office space or to an entire building floor). They more and more target to provide a customized product to be applied even in a complete building, which includes the design, the management, and the technology(3). In the recent years, the major co-working spaces brands have developed soft and hardware resources which allow them to sell this as a turned-key product.

Makerspaces work like incubators and accelerators, so their income is related to the results and the feedback from the enterprises they incubate and support.

[Summary of Characteristics of Flexible Office Space Types – logonLAB 2018]

This short investigation provides a snapshot on how office market is responding to a growing demand for flexible office space from a perspective of location understanding.

Under the country policy to upgrade and promote mass entrepreneurship and innovation, flexible office options are increasingly preferred to the standard office.

Despite the trend and the glamour, risk is a threat. The office market keeps differentiating and evolving in offer and business models: in the process of assessment and acquisition of real estate properties to develop or modernize, feasibility remains the key concern.

Investors, landlords, and REITs are the key stakeholders who need to evaluate risk, study how to secure investment and smooth the decision making ahead of project development.

Location is the king factor to keep in consideration while evaluating the potential of a project or an investment. Contextual conditions and types of target users gravitating around a specific area of the city make a big difference on which type of flexible office might be more suitable for a project.

Last but not least, considering the size of the project and integration of flexible office with other functions of the project itself and its surroundings need to be evaluated case by case in conjunction with their specific location.

[Location of Co-working Spaces, Serviced Offices and Makerspaces – Shanghai (logonLAB 2018)]

REFERENCE 参考文献:

(1) Xu Li, Fang Zhu and Zhang Zhengwu, “Summary of the Research on China’s Makerspaces”, 2017.

(2) Deskmag, The 2017 Global Coworking Survey, “Members Demographics”.

(3) Interview to Nicola Stella, Partner Manager at Naked Hub, November 2017.

(1) 徐莉,方梓旭,张正午.我国众创空间研究综述.科技广场,2017,(02):153-156

(2) Deskmag, The 2017 Global Coworking Survey, “Members Demographics”

(3) Nicola Stella访谈,裸心社合伙经理人,2017.11