Demand for flexible workspaces has exploded since the pandemic started last year. Paul MacAndrew, Country Manager for IWG in Singapore and Hong Kong explains how IWG is leading the pack and aiming to anchor itself in every town, city and suburb across the globe.
Apart from Nestle (China) and Standard Chartered, which other multinationals are in talks with IWG to allow its employees to work at any of IWG’s 3,500 flexible workspace centres worldwide?
We have also signed our largest deal with Japanese telecommunications group Nippon Telegraph a nd Telephone in March, to provide access to their global network of 300,000 employees, in addition to recent signings with other global giants like Staples and computer maker Dell, to allow 10,000 staff to use our offices globally.
Our partnerships with these multinationals is testament to the increasing number of firms shifting towards a more decentralised and hybrid structure – especially as they rethink their real estate strategy amidst evolving employee demand for greater convenience and flexibility. Over the course of the last year, the appeal of the hybrid model has seen organisations of all sizes come on board to be part of IWG’s clientele. Apart from these MNCs, we have also seen increasing renewed interest and enquiries from thousands of large and medium sized organisations, right down to small, single-office, and even freelance businesses. In markets such as Singapore and Hong Kong, we thus anticipate a greater number of multi-market enterprise deals like these to come through in the months ahead.
“The hybrid working model is the future of work” – do you agree with this statement?
Yes, I agree – the hybrid working model is set to be the norm going forward. As emphasised by our CEO Mark Dixon, the hybrid ‘hub-and-spoke’ model of working is fast emerging as the preferred way ahead for many businesses, and adopting hybrid ways of working is not only convenient, but sensible too. In fact, our Asia Pacific Occupier Flash Poll found that 84% of businesses plan to increase their investment in technology in order to support remote working and business continuity planning going forward, which goes to show how hybrid work arrangements are no longer just a ‘trend’.
As its name suggests, the hybrid approach involves more than just one solution working in tandem. With the hybrid working model, employees can have the flexibility to choose to work primarily from home – supported by regular communication, guidance and virtual meetings – while having access to a central office which will serve as the hub, connected to offices closer to where they live, should they have to be part of a physical meeting, or are simply keen to work in a different environment. The flexibility and convenience that this approach brings have been increasingly welcomed, especially as people recognise that they can do their job remotely, and have more control of their daily schedule.
As an organisation, we are also currently observing a shift towards a more employee-centric approach that emphasises on employee satisfaction and wellbeing while not hampering productivity. Thus, as businesses seek to reduce large group gatherings amidst the ongoing pandemic, while still benefitting from remote working, and are keen to create a more agile working culture – one that allows them to respond quickly to sudden developments – it is safe to say that the hybrid working model is here to stay.
What are the pros and cons of the hybrid model?
The pros of the hybrid working model are simple – it is better for people, businesses, and the environment.
For employees, the hybrid approach allows them to have greater flexibility over their daily schedules, maintain a better work-life balance and spend more time with their family and friends; and also spend less time stuck commuting. Employees are also keen to work on a hybrid basis moving forward, with recent reports revealing that employees – at least in Asia – are keen to work two to three days remotely every week.
As for businesses, such an arrangement would enable them to rapidly flex up and down in terms of the space they use – thus, reducing the anxieties they may face during difficult times such as the ongoing pandemic. We also recognise that businesses that take on a fully-equipped workspace often note a significant reduction in their property costs – releasing more capital to invest in generating stakeholder value.
In the same vein, they would also be able to reap the benefits of the cost savings that the hybrid working model brings about to the business. In fact, a study reported by EY has found that companies can save $11,000 for each employee that works in a hybrid manner. Apart from that, businesses that implement hybrid working arrangements gain the upper hand when it comes to attracting talent. For instance, our recent research found that in the long term, six in 10 office workers would like the office to be closer to home, and 77% consider a conveniently located office as a must-have for their next job move.
Lastly, the hybrid working model complements the growing ESG (environment, social, and governance) agenda. Not only is there less emissions produced since employees no longer need to commute to work, there is less paper used as documents are now digitised to cater to those working remotely. Power consumption is significantly reduced too, given the low electricity bills that vacant offices generate.
How will hybrid workspaces affect the real estate market?
The increased use of flexible workspaces such as ours comes as part of a long-term shift towards the adoption of flexible and hybrid working – a trend which has been underway for years. With this increase in demand, there will certainly be a reorganisation of commercial space and the real estate market to meet the new way of work. Building owners and landlords increasingly add flex space solutions into their buildings and portfolios. With 30% of global office inventory projected to become flexible by 2030, landlords that partner with flexible workspace providers will thus be likely to be more attractive to occupiers, especially as they seek to be in line with the future of work in the post-pandemic era.
Does IWG purchase its own office buildings or mostly partner with local building owners or local businesses?
It is a mix of the two. At IWG, we enable landlords and property owners around the world to gain access to the fast-growing flexible workspace market, to meet the needs of clients and customers, and we are certainly seeing an increasing demand from landlords to incorporate flex space in their portfolio. When we are working with landlords, we take the lead in managing flex spaces on their behalf – enabling them to benefit from the full suite of the IWG global platform (sales, marketing, operations etc.), as well as IWG’s expertise as a global industry leader in the flexible workspace industry.
There is definitely no one-size-fits-all approach when it comes to leasing arrangements and meeting the needs of our clients. Instead, we work with landlords in markets, such as Singapore and Hong Kong, for example, to develop a certain design or style that meets the needs of their buildings and clientele – be it private offices, co-working solutions, memberships or meeting rooms. We also customise our relationship and workspace arrangements to individual requirements – and this can range from simple fit-outs to revenue and profit-sharing arrangements.
How does IWG’s franchising system work in general?
We first rolled out our global franchise programme in 2019, and it has gone from strength to strength ever since. Despite the pandemic, there has been impressive growth, as many of new franchise partners have taken notice of the fast-growing demand for hybrid working spaces around the world.
In terms of our franchising system, we constantly seek for partners with the ability to operate and grow within a branded framework, and open multiple centres across the contracted territory over a two-to-five-year period. As a global industry operator in the flexible workspace industry with more than 30 years of experience, we work hand-in-hand with our partners to provide advice on the best location to open centres, support in finding the right buildings, help to structure floor plans to maximise revenue, IT and marketing services, as well as business development and performance review to ensure that our partners’ investment is performing at an optimum level of return. In short, our franchise model presents an accessible, fully supported and easy-to-operate opportunity for businesses to consider.
What is the target number of new flexible workspaces that are to be opened up in 2021 through to 2024 in the Asia Pacific region?
At IWG, our flexible franchise market is key to our ambitious expansion plans. We currently have 3,500 locations in 120 countries worldwide, and we are aiming to multiply that figure by more than tenfold in the next decade. As shared by our CEO Mark, our goal of national coverage – to have a location in every town, city and suburb – would have to be done with partners, and this includes franchise partners, building-owner partners and investor partners.
In fact, we have been seeing a growing demand for flexible working from occupiers of all sizes, as well as in industries such as the banking, finance and tech sectors. In turn, we are looking for opportunities in these sectors amid continued growth and expansions.
The next few years look very promising in terms of our progress towards achieving our end goal, and we will continue to work towards that aim until our locations are available in every town, city and suburb around the world. We are experiencing high growth across all the markets that we operate in – be it in countries in Asia Pacific, or in other parts of the world.