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Entrepreneurship

Can Coworking Spaces Save Retail?

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Coworking spaces have served a plethora of modern workers through physical spaces. There have been office blocks, private member clubs, coffee shops and more. Now, there’s a new trend on the horizon: coworking spaces in shopping centres. Whilst this might be an innovative environment for coworking spaces, the arrangement also forms part of the retail industry’s move towards a new shopping mall model emerging in 2030. This trend isn’t constrained by any region; it’s unfolding on a global level with hotspots including San Francisco, Dublin, Shanghai, Melbourne or Moscow. What has the journey involved to date?

It didn’t take long for 2017 to be coined ‘the year of the great retail apocalypse.’ Retailers closed an unprecedented number of stores with many filing for bankruptcy (such as Toys ‘R’ Us), whilst shopping malls simultaneously faced growing pressure to survive declining demand for physical retail space.

Diversification of tenants and technological enhancements might have been pursued by shopping centers as survival strategies in the past, but now are we seeing coworking spaces enter the mix. Coworking operators are taking space in shopping centers and shopping centers are developing their own coworking brands.

Why are Shopping Centers an Option for Coworking Spaces?

Retailers are taking less space and more space is available. Shopping center investment slowed over the past few years and renting space has become cheaper. Forecasts back in 2015 predicted a 20-25%rental decrease in Hong Kong. In 2016 retail investment in the Netherlands was down by 40%. In 2017 Manhattan retail rents fell by 13.4%, Canada had an average 30% retail vacancy rate, Australia’s retail investor intentions dropped by 10% and UK shopping center investment fell by 45%. Now in 2018, the likes of Ginza High Street in Japan are set to hit their lowest rent rates towards the end of the year.

Shopping malls have already tried filling space with hospitality and leisure facilities in the form of restaurants, cinemas, bowling alleys and even indoor ski facilities. However, these offerings aren’t quite enough to avoid the approximate 30% closure of space required for shopping center supply to meet tenant demand.

E-commerce giants continue their notorious online role as the major driving force behind decreasing demand for physical retail space, not to mention the shift in consumer spending from goods to lifestyle experiences. Further diversification is required and it’s starting to take the shape of coworking spaces.

Shopping Mall Owners and Coworking Brands

Westfield, in partnership with Forest City, is one of the first major retail outlets to develop their own coworking brand. In 2015, Bespokeopened on the 4th floor of Westfield San Francisco Centre. The 40,000 sq ft space is designed specifically as a retail-tech ecosystem supporting coworking, events, demos and pop up shops. The space is home to corporate and start-up members spanning industries such as payments, artificial intelligence, virtual reality, experiential, e-commerce, retail analytics and more. Bespoke hit full capacity after just 6 months.

For Bespoke, the main opportunity lies in bridging the gap between startups and big-box retailers. Kimiko Thornton, Senior Director of Innovation at Bespoke highlights, “Bespoke focuses on converging the digital and physical by curating a portfolio of members who are actively working to improve the retail landscape. Members are selectively identified by Bespoke and are connected to the C-Suites of Fortune 500 companies through our corporate innovation tours. Through this program, members benefit from access to retail executives and the opportunity to run pilots in a multi-faceted, consumer-facing environment. Retailers benefit first-hand from early access to the latest retail innovations.”

So, why would a shopping center invest in their own coworking brand instead of letting space to an operator? Kimiko notes some of the benefits: “Driving thought leadership in the industry, bringing in over 100k incremental visitors to our Centre annually, and getting early access to test and support retail innovators are just a few of the benefits. By being connected, we’ve given our startups the opportunity to run successful trials throughout our properties. Examples include Hemster, the on-demand alterations service and July Systems, the retail industry’s best location intelligence and engagement platform.”

In terms of membership types, private offices have been Bespoke’s highest area of demand; offices sold out before opening and an additional office suite was built quickly. With that being said, Kimiko explains how “demand can shift from one type of membership to another within a matter of months. This is why creating a flexible space is so important; we can easily adapt to fluctuating demand. Members do get acquired and outgrow us into their own offices, but we encourage this as we welcome fresh talent on a rolling basis.”

Atmosphere is another coworking space owned by a shopping center, situated outside Moscow’s city center towards the southwest where no coworking spaces have ventured before. The space features a conference hall and is ran by Atmosphere’s multi-business mother company, Tashir, renowned for its largest chain of shopping malls in Russia.

George Engibaryan, Business Development Manager at Atmosphere, explains how “Atmosphere is part of Tashir’s aims to diversify its assets. Running our own coworking space allows us to do this without sharing revenues with an operator. The coworking market in Moscow is still in its early development stages, meaning Atmosphere is a good business opportunity given the current low supply of operators.” Similarly to Bespoke, Atmosphere is located on a higher floor (6th), which might typically be associated with less tenant demand. Yet in this case, Atmosphere benefits from ‘a perfect oval shape and lot of natural light under a panoramic roof’.

The principle challenge faced by Atmosphere is the coworker mindset that business is done within the city center, rather than outside it. George addresses this issue by highlighting how members can avoid time wasted in congested traffic and still enjoy a workspace with a nearby cinema, restaurants and supermarkets.

Atmosphere initially experienced high demand for private offices and currently operates at 80-85% occupancy, but they now see a more equal distribution of demand amongst desk and membership types with open areas preferred by freelancers. Although there is no strict member vetting process, Atmosphere attracts innovative startups through their internal investment fund and explicitly excludes companies making excessive phone calls to avoid disruption to other members.

Operators Taking Shopping Mall Space

On the flipside, we see independant coworking spaces signing leases with shopping centers. Dogpatch Labs is a start-up hub centrally located in Dublin’s digital docklands and is CHQ’s largest tenant. The 1820s shopping center lets space to interesting tenants including the EPIC Museum, is close to the rail station and surrounded by likes of LinkedIn, Facebook and more.

Located across the first 3 floors of CHQ, Membership Manager Jake Phillips states Dogpatch benefits from “being a touch point for well over 8,000 people walking past every day. We built the retail location as a strategic mechanism to deliver our brand values of community and innovation. We are also involved with corporate initiatives; CHQ recently supported Mastercard with their app pilot focusing on the city’s demographic spending data. Being situated in a retail environment means we can also deliver a live storefront.”

Given the historic protection of the converted wine and tobacco warehouse as a Grade A listed building, the fit out costs for Dogpatch were more expensive than a non-retail space. However, the company has seen high returns as a result of the investment. Jake explains how “the investment pays when focus is on design. We built a strong relationship with the landlord through a co-branded building strategy to become a unified, authentic Irish brand and top 10 tourist destination. This journey involved strategic partnerships such as those with Google for Entrepreneurs, community involvement through local food discounts and weekly metric reports.”

Renting space from a shopping center can be a challenge in terms of opening hours beyond the operators control. Dogpatch have many software development teams working early and late hours, but thanks to their strong relationship with the landlord, they’re able to make alternative arrangements for their own operating hours. Dogpatch is also surrounded by alternative laptop hotspots, but with local farmer-grown coffee and a strong ecosystem, member applications aren’t affected. Dogpatch’s typical members include corporates seeking to innovate and start-ups seeking post seed or angel investment to Series A.

Like many spaces, private offices are Dogpatch’s most popular membership type, but Jake emphasises that “the private offices are golden; we reserve and allocate them selectively to growing members. The private offices aren’t listed on our website as we don’t want to be seen as an ‘office solution’. Most of our small teams work from dedicated desks in open space.”

The Verdict

Whether the coworking space is landlord or operator ran, there are a few key ingredients for success: community-based ecosystems as opposed to office solutions, partnerships with retail-tech startups and corporates, utilization of the retail environment for product testing, investment in design and flexibility and a criteria for member selection.

Key benefits include close proximity to leisure facilities, strong transport links and parking space, position at the forefront of retail innovation, extra visibility for increased footfall and popular uptake of private office memberships. The main challenges for operators include lack of control over building operations, potential lack of daylight and opening hours, along with frequent positioning in remaining space on higher floors. The main challenge for shopping center owners is the decision to share revenue by letting space to an operator or launch their own coworking brand as a new entrant to the workspace market.

What Does the Future Look Like?

Given the optimism around coworking within shopping centers, it’s no surprise that CBRE predict shopping centers to reinvent themselves as mixed-use ‘Centers’ by 2030. Who will be the first to get there? Western Australia is particularly active as a leading region for the lifestyle revolution of shopping centers. The Government’s ‘Direction 2031’ removes limitations on the size of retail developments and encourages the development of ‘activity centers’.

The future of coworking within shopping centers is described by Kimiko Thornton as a ‘no-brainer’: “As the retail ecosystem evolves, consumers expect dynamic experiences beyond the traditional storefront. Coworking ultimately contributes to the restructuring of the entire experiential landscape. It’s a trend shopping centers are exploring at a global level.”

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About the Author

This article was produced by Deskmag. Deskmag is the magazine about the new type of work and their places, how they look, how they function, how they could be improved and how we work in them. They especially focus on coworking spaces which are home to the new breed of independent workers and small companies. see more.

Entrepreneurship

Women on Top in Tech – Daphne Ng, CEO of JEDTrade

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Daphne Ng is the CEO of JEDTrade, a blockchain technology company focused on trade, supply chain, and financial inclusion projects in ASEAN. She is also the Scretary-General at ACCESS and Exco. of Singapore Fintech Association

What makes you do what you do?
I was introduced to blockchain technology in 2016 after I left my corporate banking career after 10 years. It was my mentor who first got me interested in this technology, which I then went on to delve further into, on its potential applications in the lending and trade finance space – domains where I came from.

How did you rise in the industry you are in?
Being in the space for 2 years and actively involved in the ecosystem, I was able to bring on the projects, network and a good degree of thought leadership in this vertical. Early on in the startup journey, our team faced many challenges. And to me, the key to rising above failures are two essential factors – resilience and support. While resilience is innate, I received a lot of help be it in terms of connections or advice. ‘Nobody succeeds without help’ rings very true for me.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
From the start, I focused on my domain expertise in trade finance and the application construct of how blockchain and DLT can be applied to these use cases. Also, my strategy from the start was to build a technology company made up of 80% tech and engineers, which is also our key competitive advantage today. At the end of the day, deliverables are about strategy and execution, which includes building and leading an ‘A’ team.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work?
I have many mentors, which includes our company advisors (all of whom are well-known in this industry) and mostly informal mentors I meet via my connections, and on various occasions and circumstances. Creating opportunities also means putting myself in the right place, at the right time. And in my case, these were mostly organic and genuine friendships formed from the initial connection.

How did you make a match if you and how did you end up being mentored by him?
To me, a match in values is very important. It also takes humility to ask for help and be willing to listen to advice, which is important in order for mentorships to be successful – be it formal or informal.

Now as a leader how do you spot, develop, keep, grow and support your talent?
I love this question! I am passionate about building strong teams and helping my people grow. I abide by the 3Rs when identifying talents: resourcefulness, resilience and right values. And then I invest in the ‘potential’ and this means giving them room to lead, make decisions and take risks.

Do you consciously or unconsciously support diversity and why?
My support of diverse talents, skillsets and characters can be seen in the make-up of our core team – all helming specific roles and each bringing their own value to the table. We need the sum of all parts to build a great company.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
Great leaders emerge in times of failures and challenges, never abandoning the team, and always putting the team’s interests before her own. And I consciously live by these mottos every day.

Advice for others?
My advice to other entrepreneurs: be resolute and dare to be different. If you are going to follow others, then you will end up on the same path as them. No right or wrong; but I would rather chart my own path. This June, we are officially launching our blockchain project, Jupiter Chain (www.jupiterchain.tech), which have garnered much interest in the industry, even before we made it public. We believe this project is the epitome of marrying innovation with practical implementation, and we want to be the first to truly operationalize blockchain for our ecosystem projects in this region.


If you’d like to get in touch with Daphne Ng, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/daphne-ng-%E9%BB%84%E7%91%9E%E7%8E%B2/

To learn more about JEDTrade, please click here.

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Callum Connects

Jace Koh, Founder of U Ventures

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Jace Koh believes cash flow is the lifeblood of your business. Understanding it will enhance your ability to run and manage your business.

What’s your story?
My name is Jace Koh and I am the Founder of U Ventures. I’ve always been inclined towards investment and entrepreneurship. I’ve played a hand in starting businesses across these industries – professional services, cloud integration, software and music. I believe that succeeding in business is tough, but that’s what makes the rewards even sweeter.

What excites you most about your industry?
Everything excites me. These are my beliefs:

  • Why is accounting important?
    The accounting department is the heart. Cash flow is like blood stream, it pumps blood to various parts of the body like cash flow is pumped to various departments and/or functions in a business. It is vital to the life and death of the business.
  • Is accounting boring?
    Accountants are artists too. They paint the numbers the way they want them to be.
  • What makes a good accountant?
    A good accountant can tell you a story about the business by looking at the numbers.
  • Why is budgeting and projection important?
    Accountants are like fortune tellers, they can predict the numbers and if you wish to understand your business and make informed decisions, feel free to speak to our friendly consultants to secure a meeting.

What’s your connection to Asia?
I was born and raised in Singapore, and here’s where I want to be.

Favourite city in Asia for business and why?
Singapore is my favourite city. We have great legal systems in place, good security and people with integrity. Most importantly, we have a government that fosters a good environment for doing business. I recently went for a cultural exchange programme in Hong Kong to learn more about their startups. I found out that the Hong Kong government generally only supports local business owners in terms of grants. They’ve recently been more lenient and changed the eligibility to include all businesses that have at least 50% local shareholding. But comparing that to Singapore, the government only requires a 30% local shareholding to obtain government support. In the early days of starting a business, all the support you can get is precious. It’s great that we have a government that understands that.

What’s the best piece of advice you ever received?
The best time ever to plant a tree was 10 years ago as the tree would have grown so big to provide you with shelter and all. When is the next best time to plant a tree? It is today. Because in 10 years time, the tree would have grown big enough to provide you shelter and all.

Who inspires you?
Jack Ma. His journey to success is one of the most inspiring as it proves that with determination and great foresight, even the poorest can turn their lives around. I personally relate to his story a lot, and this is my favourite quote from him, “If you don’t give up, you still have a chance. Giving up is the greatest failure.”

What have you just learnt recently that blew you away?
I’ve faced multiple rejections throughout my business journey, and recently came across a fact on Jack Ma about how he was once rejected for 32 different jobs. It resonated very deeply and taught me the importance of tenacity, especially during tough times.

If you had your time again, what would you do differently?
Nothing. I live a life with no regrets. Everything I do, regardless of whether it is right or wrong, happy or sad, and regardless of outcome, it’s a lesson with something to take away.

How do you unwind?
I love to pamper myself through retail therapy and going for spas. I also make a conscious effort to take time off work to have a break outside to unwind as well as to uncloud my mind. This moment of reflection from time to time helps me see more clearly on how I can improve myself.

Favourite Asian destination for relaxation? Why?
Taiwan! Good food with no language barriers and the people are great!

Everyone in business should read this book:
I don’t really read books. Mostly, I learn from my daily life and interactions with hundreds of other business owners. To me, people tell the most interesting stories.

Shameless plug for your business:
We’re not just corporate secretaries, we’re “business doctors.”
U Ventures is a Xero certified advisory firm that goes beyond traditional accounting services to provide solutions for your business. You can reach us on our website: http://uventures.com.sg/

How can people connect with you?
Converse to connect. You can reach me via email at [email protected] or alternatively, on LinkedIn here: https://www.linkedin.com/in/jacekoh/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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