Mao Daqing, founder of UR Work, said his co-work space brand aims to increase the number of its sites from 40 across 10 cities by this year-end to 60 in 2017.
Naked Hub announced in late November that it will accelerate its regional expansion and enhance its property resources via Gaw Capital Partners, aiming to add up to 30 new locations, or about 150,000 square meters and 30,000 members across the Chinese mainland, Hong Kong, and other key cities in Asia.
A research note from CBRE on innovative sectors' leasing trends said that China's small enterprises and startups are favoring co-work spaces because their cost is "lower" and their atmosphere appeals to young talent, particularly those working in the TMT (technology, media and telecommunication) space.
Sam Xie, research director of CBRE China, said innovative talent tends to work at sites in convenient locations. And when they work together, they can form a "cluster".
"Co-work spaces are meeting these demands, so they are increasingly favored," said Xie.
Tenants have other considerations too, said real estate agents.
Feng Yunxi, a real estate agent with Shanghai-based Fengxiang Real Estate Co, said: "Innovation and entrepreneurship have become a national aspiration. An increasing number of startups are emerging. All of them need a decent space to operate from. They can actually work from their homes or even rented residential flats to save on costs.
"But they are looking for a community, where they can feel that they are not alone, where they can get resources, such as business opportunities from other tenants, on short-term lease basis. That's so because startups do realize there's no certainty they will survive in the long run and thrive. If they do, they may need to move to a larger office."
That would be a risk though, from the space provider's perspective. Whether tenants' businesses succeed or fail, they would eventually likely move out, leaving the office desks empty. So, operators are evolving new strategies to make their own business viable in the long run.
In addition to startups and freelancers, mid-sized and large enterprises are also being courted by co-work site operators.
"Co-work spaces may no longer be an exclusive zone for small businesses. Operators' huge investments need a stable turnover. So, a balanced tenant portfolio becomes necessary to hedge risks.
"In the US where co-work spaces first emerged, and in Hong Kong where co-work spaces are common, bigger businesses such as banks and technology companies have moved some of their teams to co-work spaces.
"The younger generation among their staff prefer such atmosphere and some creative arms of established businesses may not find a fixed seat comfortable and suitable. I think in the Chinese mainland, more co-work spaces will allocate more resources to bigger tenants in the future," said Kenneth Rhee, CEO of Huhan Business Advisory (Shanghai).
