One lazy afternoon while taking a dip in the infinity pool of Marina Bay Sands hotel something caught my attention. Looking at the vast expanse of office buildings at the Central Business District wondering everything should be booming in the corporate real estate market. Office design and renovation should be at its peak. Interior Design companies should be so busy and the staff should have lots of sleepless nights.
The Rise of the Serviced Office Space
The concept of serviced office has been around in Singapore for a long time. In fact, my first Interior Design practice was operated out of a serviced office in Maxwell Road in 2009. Powerhouse providers like Regus and Servcorp have been around longer but not until 2014 has it blossomed. An article from the straits times has mentioned the rise and race is on. Competition increased and serviced office providers like The Executive Center, Just Office, Arcc Offices and the more affordable GreenHub by the LHN group has started popping up.
“It was good for the consumers but was starting to get worse for some Interior Design and Build companies.”
Cause and Effect
As a result of the booming serviced office business, these providers have more money to spend on marketing and expansion. Singapore as a hub for overseas business and operations attracts a huge amount of international companies wanting to set-up base here. They now have a cheaper and flexible option to start-up in Singapore and prefer to try out these serviced office providers instead of leasing and fitting-out their own office space. As a result of this, small interior design companies and contractors start to suffer and competition has increased.
Here comes the Real Disruption
It is certainly just the tip of the iceberg. Two years later in 2016 marks the entry of co-working spaces in the market. The concept is not new, it has been in western countries longer and players like The Co has been around in Singapore earlier. Hence it was the rise of the serviced office that paved the way to develop a cheaper and flexible alternative. The co-working space starts sprouting like a mushroom in the Central Business District area and the real disruption occurred.
The state of Corporate Real Estate in Singapore
Reports from JLL and The Corporate Location has been mixed but still positive. CoreNet Global Summit 2018 was held in Singapore last month and much is discussed about this disruption and decentralization. Likewise, my feedback from peers and property agents are not so promising. 2017 and the early part of 2018 has seen dismal results and the take-up rate for office space has continued to drop. Figures and analysis can be manipulated to a certain extent but feedback from the ground paints the full picture.
What is it for the Office Renovation and Contractors?
“Honestly, if things are what it was 5 years ago, I will not be writing this blog. I will be onsite even on weekends and be spending sleepless nights in the office working hard on multiple projects.”
Those days are over and its time to move on. The big players like MMoser and PDM International are still an exception. Multi-national companies like Google, Facebook, Unilever and the banks still acquire their services. They also have overseas operations to augment their revenues if things slow down in Singapore.
How about the smaller firms and contractors struggling and fighting for even the smallest office fit out project out there. Personally, I witnessed interior design companies let go of older staff to replace with younger employees to minimize cost. The experienced staff then starts their own small company and competition increases even further. With fewer projects and more small firms to pitch what are the chances of closing a deal after spending time and effort to submit a proposal? Consequently, the question has already been answered at least for me.
Let me know your thoughts and share your experience, I am sure I’m not alone.
You may want to read this related article: The Importance of Corporate Interior Design in Singapore