A recent report of CBRE specified that as of April 2018, there were 19 co-working spaces (CWS) in Hanoi and 15 CWS in Ho Chi Minh City with more than 23 co-working operators.
By the end of this year, there will be a total of 45 co-working spaces with Hanoi and Ho Chi Minh City accounting for 56 per cent and 44 per cent of market share, respectively.
Major local operators such as Toong, UP, Circo and Dreamplex are all expanding at an accelerated rate with each accounting for a smaller share of the market compared to 2017.
However, as the market is expanding in terms of venues and operators – smaller operators with only one venue are also opening rapidly, growing from 30 per cent last year and expecting a total of 42 per cent of market share by the end of 2018; major local operators still account on average 12 per cent of total market share each.
Foreign entrants such as NakedHub from China and Hive from Hong Kong have started to make their marks on the market, with Hive planning to open one more venue in the centre of Ho Chi Minh City by the end of this year and NakedHub launching two venues in Ho Chi Minh City and Hanoi in the second quarter of 2018.
Other international CWS operators are also looking forward to entering Vietnam in the next two years.
Previously, CWSs in Vietnam are generally not located in prime buildings or areas as operators need to keep rental costs at a manageable level.
They are more usually found in underutilized buildings in decentralized locations, especially the CBD-fringe. Both Toong and Up, major CWS operators in Vietnam, operate their centers from grade B or lower-grade buildings.
In Hanoi, a few CWS have located themselves in Cau Giay district, an emerging office cluster, while CWSs in Ho Chi Minh City tend to be more spread out among CBD-fringe districts such as district 1, 2, 3, 4, Binh Thanh and Phu Nhuan.
Targeting on the niche-segment
According to CBRE, CWS operators are now changing their game, in which they are targeting on their niche-segment which will dictate where they will be located.
For example, as Toong is continuously offering their spaces to a diverse number of clienteles in different industries, their spaces are getting more differentiated in each co-working space venue’s designs. Circo, in particular, has always been more about location-convenience for their members in that as they expand, their venues are always in well-connected traffic-hub locations which are easy to get to and from CBD.
Co-working spaces usually charge on a per person, per seat, or per desk basis rather than on a per square metre basis like traditional offices. The main options include flexible desks, fixed desks, and private offices. For flexible desks, rent is charged on a daily or monthly basis, while for the other two options, a monthly rate is applied. Some co-working spaces may also offer hourly rates for non-members.
Market share in the year 2017 and 2018 The cost of renting co-working space varies across cities. Co-working spaces in Hanoi and Ho Chi Minh City are currently priced lower than most other cities in the Asia Pacific, which reflects the general cost advantage of renting office spaces in Vietnam.
In Ho Chi Minh City, as some co-working space operators have expanded into the CBD area at the beginning of 2018, pricing for private offices reportedly increased from 30 - 50 per cent in venues at central districts.
Typical features of a co-working space include a shared workspace with a shared reception, meeting rooms, access to high-speed Internet, printing and copy machines and cafeterias. Most of these facilities such as wi-fi, a receptionist with a phone answering service and a pantry with complimentary beverages such as coffee, tea, and water are usually included in the rental rate. Members are given a monthly allowance for meeting rooms and printing machines and are charged extra if they exceed this amount.
Extra amenities include F&B, which can also be an extra source of revenue for co-working space operators. Some choose to operate F&B themselves or outsource these components to other providers.
More co-working space operators are providing other amenities and special services such as art galleries, games room, beds and auditoriums as a point of difference. These communal spaces enhance the concept of flexibility, collaboration, and diversity as well as appearing more attractive to prospective and current tenants.
Who are using co-working spaces?
A study by CBRE Research Vietnam in 2017 found that 91 per cent of co-working space members are millennials, especially under the age of 35. This proportion is a lot higher than the global average of 67 per cent and reflects Vietnam’s young demographics which offers a good source of demand for CWS.
A Deskmag survey in 2012 found that more than half of co-working members worldwide are freelancers. In 2017, CBRE Research Vietnam estimated that 54 per cent of users in Hanoi and Ho Chi Minh City are either the founders or employees of start-ups, while approximately 14 per cent are freelancers and self-employed. These start-ups include both local and overseas firms.
The study also found that more than 55 per cent of CWS users work in the IT industry, with the remainder spread across various sectors including tourism, F&B, education, marketing and real estate.
Looking forward, the CWS movement in Vietnam will continue to expand in terms of supply and niche-offerings to their targeted tenants.
Foreign CWS operators are aggressively trying to find space, especially in Grade A office buildings as well as upscale Grade B buildings in prime CBD areas in order to establish both their brandings and market share within Vietnam.
This high level of demand, as well as the fact that the market is still relatively new compared to APAC counterparts, create opportunities for upcoming M&A activities among local and foreign co-working spaces.
