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Thriving start-ups drive strong growth for coworking spaces

The booming start-up business has spurred the aggressive growth of coworking spaces as local entrepreneurs seek a more nurturing and affordable environment to develop their businesses

Rachmadea Aisyah (The Jakarta Post)
Jakarta
Tue, June 25, 2019

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Thriving start-ups drive strong growth for coworking spaces

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span>The booming start-up business has spurred the aggressive growth of coworking spaces as local entrepreneurs seek a more nurturing and affordable environment to develop their businesses.

Coworking Indonesia, an association of coworking space operators, has estimated that there are currently more than 250 coworking spaces spread across the country, with at least 20 percent of them concentrated in Jakarta.

The figure had grown exponentially from around 45 coworking spaces in mid-2016 as operators kept on expanding, Coworking Indonesia secretary-general Felencia Hutabarat said.

“There is a very strong growth of start-ups as well as entrepreneurs who are seeking physical offices [...] like coworking spaces, which are quite helpful as their rent is flexible and tenants do not have to manage or maintain them as an asset,” Felencia told The Jakarta Post recently.

Tenants or members of these coworking spaces see the offices not only as a practical place to work but also as a place where they are more likely to meet stakeholders that could encourage their growth.

For instance, start-ups in the advertising business often prefer to rent a space where they can find potential clients operating in the spaces next door. Coworking spaces also actively help members out by promoting their services, Felencia said.

However, uneven economic growth in different parts of the country has presented a challenge to the coworking space business.

“In regions where the economic growth is stalling, opening or operating a coworking space is more challenging as potential tenants might find it cheaper to run their businesses from home or rent simpler spaces, like a small shophouse,” Felencia said.

According to a 2018 report by the Indonesian branch of property consultant Jones Lang LaSalle (JLL), the amount of serviced offices and coworking or flexible spaces increased by almost 60 percent in 2018 with the number of operators growing by 8 percent.

Local operators have a relatively strong presence in the coworking business with a 40 percent market share against overseas operators at 60 percent, the report says, with CoHive being the quickest-growing local operator and WeWork the standout international group.

Even though the association does not have a precise figure on the growth of coworking spaces, Felencia expressed belief that the actual growth was higher than 60 percent, adding that similar double-digit growth was foreseeable in the next few years.

Separately, CoHive CEO and founder Jason Lee confirmed the company operated the highest number of coworking spaces.

CoHive operates the most spaces with 31 locations in four cities, followed by GoWork with 14 locations and Kolega and UnionSPACE, each of which have seven locations, according to CoHive internal data.

CoHive announced it had secured $13.5 million from Series B funding last week. Lee said the company was set to open at least three new locations in Surabaya, East Java; Bandung, West Java; and Makassar, South Sulawesi.

“We already have one property lined up in each of those cities [...] We plan to open them in the third or fourth quarter this year,” Lee said.

Aside from expanding its coworking spaces, CoHive would also use the funding to branch out in new services, one of them being a coliving space located in West Jakarta in partnership with Keppel Land.

The coliving space, he said, would provide services similar to a regular apartment building but with better affordability as many of its facilities would be purposed for common use, adding that the rent would have a starting cost of Rp 3 million ($212) a month.

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