Dubai: Want to book an office space from Dh62 a day? And not in some remote corner of the city, but an upscale building — Dubai Boulevard Tower 1 bang opposite The Dubai Mall.
The operator: Regus.
If the preference is to pay by the month, there’s a spot available for Dh500… and again the address is at one of the fancier spots in the city — 17th floor of Iris Bay Tower in Business Bay.
The operator: Maple Leaf Business Center.
Dubai’s new “co-working” spaces are now offering tenants the flexibility to choose across a wide range of rents and base themselves right in the heart of its commercial district.
And there’s more to come: WeWork, the US company that did much to make the co-working business all fun and frolic, opened its first UAE location in Abu Dhabi on Monday at the Hub71 cluster.
It will add a second location, in Dubai at the One Central, part of the Dubai World Trade Centre expansion.
The best part is that co-working is now giving a boost to the commercial real estate market in the UAE, which has been through a prolonged period of uncertainty brought on by a slowing economy and businesses across sectors shedding jobs.
Who’s leasing to co-work?
One would have thought co-working is all about start-up owners wanting temporary locations before they scale up their business to move into a bigger office.
But the concept is now tapping a much wider user – those businesses who want to keep a tight control on costs before they can think big, or used as temporary bases by companies overseeing specific projects with a defined timeline.
According to Prathyusha Gurrapu, Head of Research and Advisory at Core, the consultancy, “The demand is fairly distributed across entrepreneurs, SMEs and large corporates. Globally, WeWork reports that 40 per cent of its members work for companies with 500 or more full-time employees.
“It categorizes these companies as “enterprise members” - and this is its fastest-growing type of membership.”
What works in residential…
Some of the same themes used to sell or lease residential properties are now being used for co-working spaces. Maple Leaf Business Center styles its new location as offering “affordable luxury”.
“All businesses do not really need a traditional physical office to operate from,” said Danish Sharif, Managing Partner at the firm. “All they need is a dedicated space to meet their clients and transact business, with recourse to meeting rooms.
“For Dh500 a month, we are offering the flexibility of using the prime office space at a prestigious location in Dubai’s business district.”
Adding to the footprint
Estimates suggest that Dubai has more than 700,000 square feet of flexible/co-working space, and more being added. The WeWork location at One Central is to open this quarter, and it would be interesting to see the take-up rates there.
Yet, it still adds up to just over 1 per cent of the total office stock in the city.
“There are more than 80 co-working centres operated by over 50 operators,” said Gurrapu. “To give perspective, WeWork (as a single operator across multiple locations) is the largest tenant in New York and occupies more than 1.7 per cent of office space in Manhattan.
“Dubai is primed to take advantage of the co-working trend as downsizing activity, subsequent expansions and spatial demand - along with faster occupation timelines from tenants - require agile workplace solutions.
“Undoubtedly, co-working/serviced offices and other “flexible” real estate solutions are disrupting and reshaping the global office market. We are witnessing a flight to quality at the top end of the leasing spaces. They are now perceived to be fairly priced for the location, building grade, interiors, ambience and amenities they provide.
“Globally office demand is evolving with focus towards productive workspaces… where space is a service and commodity.”
Landlords are quick to learn
Over the last year in particular, Dubai’s landlords with office buildings on their books have learnt to work with co-working space options. More buildings now allow co-working management companies to take up a floor or more, and then sub-lease it to individuals or businesses. (Much the same is happening in residential as well, with short stays and holiday homes.)
Regus took the 9th floor at Dubai Boulevard Tower 1, where the 1,036 square metres of open plan space can be configured to client requirements. “This means one can divide and use it as needed and as the business grows,” said a Regus spokesperson. “Law firms, real estate companies and financial institutions will share the building, while well-known multinationals base their headquarters in this highly sought-after area.”
Landlords by taking to co-working are “aiming to improve the micro-community and build a pipeline of future tenants,” said Gurrapu. “Landlords broadly practice three types of flexible space strategies - leasing to a third-party operator, partnering with operators, or self-operate.”
* Agility: Ease and speed at which one can downsize or expand spatce requirements compared to conventional leasing methods.
* Competitive costs: Cost per seat in coworking spaces are competitive.
* Brand and positioning: Smaller SMEs, start-ups and those corporate firms entering the region gain the option of having access to upscale facilities in commercial districts without having to maintain fully-fledged offices.
* Quicker occupation timelines: Due to the plug-and-play nature of co-working spaces and readily available infrastructure, tenants benefit from immediate occupation timelines. With a significant portion of enquiries coming for fitted, plug-and-play offices, this is a big incentive for potential tenants.
* Productivity and collaboration: Peer learning, collaboration and knowledge sharing with professionals from other fields can help employees stay updated on market trends. The risk of IP protection can be mitigated by providing dedicated spaces for corporates who have reached a certain footprint.
Credit: Prathyusha Gurrapu, Head of Research and Advisory at Core.