The business of Centres
Business Centres or Serviced Offices, are one of the least obvious but fastest developing sectors within the Shanghai property market. Offering an occupancy solution which is flexible in both scope and service, they are particularly popular with companies new to Shanghai or those already established here who are undertaking specific projects. From their investors view point, these centres are closer in asset type to hotels rather than traditional offices. Expansion and competition over the last 2 years have seen a broadening of both styles and price brackets across the sector.
At its simplest, a serviced office is akin to a smart hotel. Combining an entrance lobby area with front desk service personnel, individual furnished work suites and then various communal areas ranging from small break-out areas, coffee lounges, communications room and, in the most exclusive, private club rooms and shower facilities. Behind these facilities are a host of dedicated support personnel, available to provide IT support, secretarial services and front desk reception. As with a hotel, the concept is to provide an environment where the client can simply walk in and start using the facilities.
Upscale hotel or
Business Centre at TEC?
From a handful a couple of years ago, Shanghai now hosts some 25 principal centres. While most operators offer broadly similar services, the level of service and quality of the buildings in which they are located, has created a two-tier market. Regus, a UK based company, has established itself as the market leader in terms of premium services and office unit availability, with 6 different centres across the city. Other leading operators in this sector include APBC of Singapore, The Executive Centre and Servcorp. Leading service operators outside the premium sector include Asianbiz, Office Lister and Apollo.
All of the above have been experiencing a period of sustained growth. Occupancy rates in the majority of their centres stand at over 90%, which when measured against hotels, is exceptional. Strong market conditions and competition, have also meant operators have shown an ability and willingness to innovate. New centres in Xintiandi by The Executive Centre, which has focused on a very boutique office style offices in a low rise building. Across the street, APBC have created a post-modern feel in their new centre at Platinum Tower, which also boasts a private club room and shower facilities.
Design style at APBC
In contrast to these higher end products, two innovations in the second tier market include serviced offices in a historic mansion and warehouse in JingĄ¯An. The historic mansion combines interesting spaces within a traditional and quite grand historical setting. While the warehouse offices push the concept to another level, providing a large 1,000sqm open office where desks can be rented on a monthly basis and supported by shared meeting areas and a pantry. Though lacking the obvious privacy of individual work suites, the open style has proved particularly attractive to 1-2 person operations, ready to work in a more informal environment.
Period offices
at Office Lister
Two further innovations can be seen in products offered by Office General and Regus. In the case of Office General, their expansion into Tower 2 at Plaza 66 developed the concept of serviced offices by creating larger unit sizes of up between 60-100sqm. The idea being to provide ready to use suites in a premium building, of a size which would not normally be possible to obtain. In addition to which, the provision of shared meeting spaces reduced the need for clients in these units to use up valuable space on a meeting rooms. Providing savings both on the capital outlay and overall space requirement. Finally, RegusĄ¯ sixth centre in Shanghai is a massive 130,000sqm retail, office and conference centre on Shanxi North Rd. Comprising a whole building which will combine smaller office suites to those capable of hosting 40-50 persons.
Despite favourable market conditions, the level of competition in this sector has encouraged significant innovation. It has also meant a broadening of the product away from the traditional 2-4 person workstation approach. However, once operators start innovating, the challenge will be to see how deep the market is for non-traditional approaches (i.e. large size serviced offices of 30+ people or more informal working environments). The next 2-years will likely see an interesting solidification of what works and can be sustained.
