HANOI – 08 June 2017
Co-working space operators have expanded rapidly in the two main cities of Hanoi and Ho Chi Minh City since the concept was first introduced to Vietnam in 2012, and started to gain traction in 2015 with the launch of local operators Toong and Dreamplex. As of June 2017, there are a total of 17 co-working space operators in 22 venues. All but one of the operators are local, but the situation is set to change as co-working spaces run by regional operators are set to open later this year and in 2018.
The co-working space industry has been growing at 53% on average per annum over the past five years. To compare, over a similar period, supply of co-working space in Vietnam has grown at a rate of 58%. With co-working space still so new to the local market, and major regional and international operators yet to enter, growth is set to accelerate further in the coming years.
A study by CBRE Research Vietnam found that 91% of co-working space members are millennials, i.e. under the age of 35. This proportion is higher than the global average of 67% and reflects Vietnam’s young demographics.
The growth of co-working space has been driven by the start-up boom. However, as shared and flexible working environments become more popular, co-working space is emerging as a viable option for corporate occupiers.
The cost of renting co-working space varies across different cities. Co-working spaces in Hanoi and Ho Chi Minh City are currently priced lower than most other cities in Asia Pacific, which reflects the cheaper office rental costs available in Vietnam. In terms of location, Co-working spaces in Vietnam are generally not located in prime buildings or area as operators need to keep rental costs at a manageable level. They are more usually found in underutilised buildings in decentralised locations.
Events, networking and community are the backbone of co-working space and are the key characteristics that differentiate co-working space from other workplace models such as serviced offices and traditional offices.
Co-working space provides flexibility, creativity and a wide range of amenities for tenants. It also offers a far more cost-effective solution for tenants compared to traditional leased office space.
To landlords, the need to adopt co-working space has emerged as occupiers’ requirements continue to evolve. Such a decision will require landlords to consider the factors of profitability and culture.
Co-working is primed for further rapid growth in Vietnam in the coming years amid strong expansion by both local and international operators, with demand to be driven by local start-ups and freelancers, international start-ups and freelancers, and increasingly by small corporates.
The presence of larger operators will likely usher in a period of consolidation and M&A activity within the industry, forcing poorly managed or unsuitable co-working spaces out of the market and improving the quality of existing operators.