This article first appeared in The Edge Financial Daily on August 23, 2018

KUALA LUMPUR: A growing demand for co-working spaces and flexible working solutions in the region, including in Malaysia, is helpful in counteracting the current oversupply of commercial offices, said global workplace provider Regus.

Regus country head for Malaysia, Brunei and Indonesia Vijayakumar Tangarasan said property developers and companies such as Regus can work together to improve the market situation.

“How we can help is to work with landlords,” he told The Edge Financial Daily. “What landlords typically do is to sell a single floor, for example, which can be too expensive for companies to start with. Our strategy is to go in, take one or two floors, and bring in different customers to help drive traffic there.”

“We share the capital expenditure [with developers]. We ask them to invest in it, and then we share the profit. And we manage the place,” he said.

Regus is owned by London Stock Exchange-listed International Workplace Group plc (IWG), with 3,000 offices in 120 countries. In Malaysia, it has 32 offices.

Vijayakumar said Regus has been working with some large developers in Malaysia with effective results, without providing details.

“I believe it is working [well] as the market seems to like the idea when it sees different brand names occupying a building. I believe this will help property developers to start filling up empty offices.”

Vijayakumar noted the empty offices are due to a weak economic situation, rising property prices and generally changing work preferences.

“Companies’ preferences have also changed. Given much uncertainty, some prefer to take up a space with Regus, for example, because they don’t want to invest in opening their own spaces and forking out the costs needed to set them up,” he said.

There is also greater flexibility for companies to dictate how long they need to stay. They would not be able to do that when taking up their own offices with a long commitment lease, said Vijayakumar.

Additionally, according to IWG’s latest global Flexible Working Survey, 92% of Malaysian professionals said a flexible workspace enables a company’s employees to be more productive while on the move, and 88% said remote work locations help reduce commuting time for employees.

Under Regus, companies and individuals have the option of signing up for an office space which could be a private or an open co-work space, a virtual office address or a global membership giving them access to any offices worldwide.

“We find more people want to find a place where they can collaborate with other [parties], and to get the services they need under one roof. For example, there could be another person working in the same space offering a service that they need. So that is useful,” he said.

On the growing trend of flexible and co-working spaces, Vijayakumar said the demand in Asia has vastly increased.

“In the US and Europe, it is a norm. It has been there for years because their real estate cost is too high. So, you can’t really work in an office in, say, New York. It has to be more of a co-working space arrangement. And people there have accepted it.

“In Asia, it has really caught up; it is the fastest-growing region actually. Countries such as China, India and Australia have accepted it. It is the same for Japan as the co-work concept is embedded in the culture there.

“For Southeast Asia, it has become a trend over the past couple of years, especially since there has been much growth in small and medium enterprises and start-ups. So they would always find a place where they can build a community.”

As such, Regus has rapidly expanded its offices in Malaysia. “Five years ago, we had six offices only; today, we have more than 30 offices,” said Vijayakumar.

Regus Malaysia has offices spanning Kuala Lumpur, Selangor, Penang, Johor, Kota Kinabalu and Labuan. Vijayakumar said the company plans to expand to other states.

On average, Regus Malaysia opens about six to eight offices a year — about 40% are co-working spaces and 60% private ones. Recently, the company opened its latest office at Menara Summit in Subang Jaya, Selangor.

To meet growing demand, its parent IWG will be bringing in Spaces, a sister brand of Regus focusing on providing larger co-working spaces at higher prices, added Vijayakumar. “Spaces will be coming to Malaysia in the first quarter of 2019. We plan to firstly open about two or three offices.”