The coronavirus crisis may have ruffled the feathers of coworking space operators with empty offices as workers stay home. But industry experts are adamant that physical office space can never be replaced as tenants seek greater operational flexibility and comfort. Pamela Lin reports from Hong Kong.

The COVID-19 pandemic, which has decimated global businesses on an unprecedented scale, has revolutionized the way people live and work, triggering the shift to work-from-home.

But will the trend take root and be sustainable post-pandemic, posing a grave threat to the existence of the physical office space?  

Real-estate players and key operators of coworking spaces that had taken the world by storm in the years prior to the coronavirus onslaught are at pains to debate that the office is here to stay. They see working from home as merely an expedient step to thwart contingencies like COVID-19, and such an arrangement can never take the place of physical offices.

The most severe health crisis the world has seen since the Spanish flu pestilence of 1918 has prompted companies to revisit their office-space strategies with costs, flexibility and employees’ wellness uppermost in their minds.

“Corporations will want greater agility and flexibility within their real-estate portfolios so they can adapt more quickly to emergencies like COVID-19,” said Sean Lynch, managing director, Asia Pacific, at The Instant Group, which specializes in independent flexible workspace solutions.

Inevitably, he said, there will be more companies taking up flexible work space options for that sort of agility. 

According to Lynch, the number of inquiries about service offices and flexible coworking spaces in Hong Kong has returned to pre-COVID-19 levels, offering a positive sign as the market gradually rebounds. 

Singapore-based hospitality-inspired coworking-space operator The Great Room — born four years ago with a vision to “change the way people work, meet and socialize” — is on the same page as The Instant Group, saying the third and most severe wave of coronavirus infections in Hong Kong hasn’t watered down people’s appetite for coworking space, with the number of inquiries it has received on the rise.

The Great Room, which launched its first location in Hong Kong in April last year, said the demand for The Great Room’s Business Continuity Plans surged during the third wave of COVID-19 in Hong Kong, following an increase in inquiries from February to April 2020.

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Companies are looking to cut costs and be agile amid the pandemic that has wrecked the world economy. The Great Room identified an accelerated opportunity for the flexible-workspace sector with an increasing and compelling need for businesses to incorporate at least 20 percent flexibility into their overall real-estate needs. 

Companies might allow their employees to have hybrid working schedules, including working from home, in the office or from another flexible workspace, said Nigel Smith, managing director of Colliers International’s Hong Kong office

Jaelle Ang, co-founder and chief executive officer of The Great Room, said tenants are requiring and demanding even greater flexibility than they expected during the crisis to accommodate their flexible working schedules. 

Deemed as the hotbed for startups, coworking space is coming into the view and meeting the requirements of traditional companies and others seeking operational flexibility. According to The Great Room, two-thirds of its inquiries since June have come from enterprises such as professional services and finance firms that had never used flexible office space previously. 

With the number of coronavirus infections dwindling in Hong Kong, companies are gradually getting their employees back to the office. “We all left the office in a hurry when things happened really quickly. But, the return is much more staged and needs to be calibrated from a safety standpoint,” Ang said.

It’s also essential to bring people back to offices and ensure they’re psychologically comfortable and more engaged, she said.

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As the working-from-home rule was enforced by most companies, businesses and employees are split over the arrangement. Some say it saves commuting time and costs and allows a work-life balance, while others say it makes the separation between work and home tenuous and they miss the interactions at the workplace with the work-from-home period being repeatedly extended.

US investment bank and financial services provider JPMorgan Chase & Co said that the work-from-home pattern has affected its employees’ productivity and “creative combustion”, especially with an impact on the bank’s younger employees. 

More flexibility needed

Lynch agreed that the physical office still provides the right social environment, particularly for those in the younger demographic, who are learning new things in their careers. “There’s much less scope for having collaborative conversations and generating ideas just by everybody working remotely,” he said.

While physical office space is still indispensable in gathering professions and boosting knowledge-sharing and company culture, industry experts believe the future workspace will be injected with more flexibility, taking employees’ wellness and safety into consideration.  

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Nigel Smith, managing director of Colliers International’s Hong Kong office, believes that more companies would be willing to incorporate flexible working schedules in their policies after the months-long work-from-home trial. He said that companies might allow their staff to have hybrid working schedules, including working from home, in the office, or from another flexible workspace.

Meanwhile, it would be perfectly normal for employees to spend five minutes sanitizing their desks and hands the minute they arrive at the office, he said, adding that tenants have now begun looking for environmental and sustainable features when choosing office space.

New World Development’s brand K11, which develops K11 Atelier office projects, sees strong demand for healthy and sustainable workplaces and greater flexibility in the office setting in a post-pandemic world. Tenants also want higher hygienic standards, more sophisticated ventilation systems and more personal space as a result of social distancing, according to K11.

Considering a wider acceptance of flexible working schedules amid the pandemic, Smith stressed the importance of repurposing vacant spaces into workspace whether it’s in the malls or residential districts to get in line with the more-flexible working mode adopted by the workforce. 

“If retail space is less occupied by retailers, then they might be transferred to flexible office space,” such as the vacant space in the retail podium, Smith said. He expects coworking space operators to redesign the empty workspace for other uses. “Be it a residential or downtown district, it needs to be repurposed by creating more space for general use,” Smith said.

In the Asia-Pacific, the flexible office market has grown by 13 percent in 2019 compared with the previous year, according to a report by The Instant Group. Hong Kong led the way in terms of center count — a total of 391 by the end of the second quarter of this year. 

The Instant Group said a large number of private or family investors and entrepreneurs see the flexible work space industry as the next growth area or the next opportunity for them in the region.

Contact the writer at pamelalin@chinadailyhk.com