CDL invests S$15m in co-working space operator in China

SINGAPORE — Underlining the growing co-working space trend, more than 60,000 sqf in Republic Plaza will be converted into shared offices as part of its owner City Developments Limited’s (CDL) agreement to invest 72 million yuan (S$15 million) in Chinese co-working space operator Distrii.

The upcoming co-working facility at the 66-storey Republic Plaza Tower 1, a prime Grade A office building connected to the Raffles Place MRT Station, is expected to integrate food and beverage, entertainment, recreational and office facilities. It is scheduled to open in the first half of next year as the space is still currently leased out.

The new facility will take over space that will be left behind by The Bank of Tokyo-Mitsubishi, who has decided not to renew its lease. In recent years, prime Grade A office space in Singapore’s Central Business District (CBD) has been converted into co-working spaces including that at Capital Tower, which was opened in 2016.

“With the burgeoning sharing economy, an increasingly mobile workforce and a greater requirement for flexibility, we see strong potential in co-working spaces and the demand for them has been rapidly growing. Our investment in Distrii enables us to immediately gain entry into the sector,” said Mr Sherman Kwek, deputy chief executive of CDL. “Through this strategic partnership, CDL will contribute not only capital but also provide our international market expertise to support Distrii’s expansion both in China and on the global scene,” he added.

CDL’s latest venture follows that of CapitaLand, who formed a joint venture with Collective Works last year to launch a co-working space occupying the entire 22,000 sqf of Capital Tower’s level 12.

In response to TODAY’s queries, CapitaLand said the workspace now counts venture capitalist firms, niche marketing firms, boutique consultancies, financial services firms and media and technology companies among its members. The co-working space trend has gained traction in Singapore and globally in recent years. A 2016 survey by co-working publication Deskmag found that the number of such spaces worldwide surged from just 75 in 2007 to more than 7,800 in 2015, representing a compound annual growth rate of 71 per cent. Deskmag also forecasts that there will be more than 37,000 co-working spaces by 2018.

In Singapore, property analysts estimated that there are about 250,000-300,000 sqf of co-working space islandwide, with some 20 per cent of them located in the CBD. With the lacklustre economic environment preventing many corporates from expanding, co-working space operators have emerged as one of the bright spots in the office sector here.

However, analysts said the outlook for Singapore’s office sector remain subdued, with rents of Grade A buildings in the CBD expected to continue coming under pressure this year.

“The real estate footprint for these co-working outfits (in Singapore) is not very large and may not make significant impact on the office leasing market in the short term,” Dr Chua Yang Liang, JLL’s head of research for Southeast Asia.