A series of presentations at the ULI China Mainland Winter Meeting, held in Shanghai in December, demonstrated how the growth of the sharing economy, combined with the desire for social connectivity, is affecting the development and management of office, residential, and hotel properties.
James Macdonald, head of China research at Savills, talked about the rapid growth of coworking in China. “There is continued growth and evolution in the coworking space. Coworking started off obviously targeting startups in larger cities, but we are seeing tenants take up . . . in one case 13,000 square meters [140,000 sq ft] in coworking spaces. Sometimes, a coworking space has a single tenant.”
As a consequence of competition from coworking companies, office landlords are now looking to bring coworking elements into their building, he said. “Firms such as WeWork have grown organically, but some of the coworking players in China, such as domestic company UCommune, have been much more aggressive in terms mergers and acquisitions.”
Even with 7 million university graduates each year, Chinese companies are engaged in a fight to attract and retain the best and brightest talent, Macdonald said. “Think about someone who is born in 1977, the start of the millennial age, versus someone who is born in 1997. That is a 20-year gap. There is quite a fundamental shift in terms of the way that people communicate, work, study, and everything else. That is going to have implications in terms of the new workforce and our understanding about workplaces for the new generation coming through over the next five years.”
Macdonald also noted that technology companies are now driving the China office market. “IT sector growth is going to be a big thing; we are seeing startups and established companies which are growing rapidly. These guys predominantly focus on key markets in Beijing and Shanghai, but they are increasingly looking at some of the second-tier cities. So these markets are seeing significant take-up by these IT companies as well.”
However, he added that the financial services sector, while not the fastest growing, was still the major office occupier in China and was also showing growth.
Karl Bieberach-Dielman, chief development officer at Hong Kong’s Rosewood Hotel Group, said that a sense of community was becoming the driving force behind the group’s hotel offerings. “People are increasingly lonely because they are able to go and live further away from their families because technology enables that. Hotels have to address that issue.
“The founder of WeWork said it is better to be together than alone. This really is at the root of the movement that we see with a lot of coworking, and sharing and co-living and all of those things that are really permeating into the hotel space.”
He said that Rosewood was launching a new concept called Khos, which is intended to tap into these needs. “We have three projects we are looking at in Tel Aviv, New York, and Los Angeles and we have four pilots, or incubators, here in Asia and China. I think we’ll probably see the first one opening in 2020.”
The new brand also draws on Asian influences because “we recognize that Asia increasingly has a more prominent role in the world and there is no lifestyle brand right now on a global scale that speaks to Asia,” he said. Khos will feature compact rooms but more shared social and workspaces, Bieberach-Dielman said.
Smaller private rooms and larger shared spaces are characteristic of co-living developments and Qiao Yu, general manager of Pamfleet Shanghai, showcased a co-living project that her company is developing in Shanghai. Cohost West Bund features 66 apartments, including studio, one-, and two-bedroom units; a full gym with a swimming pool and tennis courts; and over 1,000 square meters (10,764 sq ft) of boutique streetfront shops.
Yu said that the development is pitched at 20- and 30-something graduates who have good jobs but who cannot afford to buy an apartment in Shanghai. Rents are higher than those for small private apartments but are cheaper than those for serviced apartments. She said that tenants were looking for a blend of “privacy, convenience, and sharing.” The development has a community manager to help tenants and organize a social program.
Target tenants are design- and fashion-conscious, hence the associated boutique retail space and also a focus on the design of the development, which has been created in partnership with boutique developer Build.
Due to the rapid rise of apartment prices in China’s larger cities, the co-living space has attracted a lot of investment, with international firms such as Warburg Pincus and Gaw Capital Partners investing in operators.
