THE EMERGENCE OF COWORKING SPACES: IMPACT ON COMMERCIAL RENTALS IN SINGAPORE

Abstract

Purpose – This study focuses on the coworking concept, a business service provision model that allows co-localisation of working professionals from various backgrounds to work independently in a shared office space. It provides the members with flexibility on their length of memberships and square footage options. Currently this sector stands among the top six occupiers of Singapore’s office space and have also expanded into shopping malls too. With rising demand from this sector, it will be meaningful to analyze its impact on commercial rents in Singapore. This paper aims to empirically verify the findings, which are also backed with insights from practitioners involved in this field.

Methodology – Firstly, the primary analyses on commercial rents were performed through a Difference-in-Differences (DID) model. Secondly, a Triple Difference (DDD) model was used to test differential impacts of commercial rents in different regions, after the emergence of coworking spaces. Thirdly, the study tested for any spillover effects arising from the presence of coworking spaces.

Findings – Evidence shows that the launch of coworking leads to an increase in median office rents by approximately 5.18%, but lowered median retail rents by 13.1%. For office spaces, positive spillover effects were observed for non-coworking streets located within the 0.5km to 1km boundary of these coworking spaces as more companies were attracted to the vicinity to leverage on positive externalities of coworking spaces.

Contribution – To the author’s best knowledge, there is limited empirical research on coworking spaces in Singapore. Hence, this paper serves as one of the first few findings to supplement the existing literature incorporating insights from practitioners interviewed.