This July, Vlad Savin, Head of Business Development at Acclime Vietnam and project lead of the ‘Coworking and Flexible Workspace in Vietnam 2020-2021’ Market Report has discussed with Linh Hoang, Co-Founder and CEO of Circo Coworking Space Vietnam about the role of the coworking workspace in the real estate narrative, and his personal views on growth, competition, challenges and the future of the industry in Vietnam during Covid.
Hoang, what do you think is the critical decision driver for businesses when choosing a coworking space against a traditional lease? How do the occupiers’ decision making evolve over the last few years and how did this impact your business model and market positioning?
We have done an extensive research to see what the top considerations for enterprises are:
- Location and accessibility: where the space is located, its accessibility from different parts of the city and any amenities around it.
- Flexibility: lease durations, payment terms, and other contract terms that support flexibility of the lease, and
- Scalability: the ability to scale teams up/down depending on business needs.
Flexible workspace in Vietnam is growing rapidly, with many new coworking spaces being established; what are the key differences between your brand and other competitors and how do you differentiate your unique culture?
We create key market differentiation by 3 core elements:
- Product/service quality as key differentiation: we aim to provide a fully serviced office with high-quality facilities and convenience to members at different sizes.
- Customer satisfaction as a customer’s benchmark: we serve enterprises from both local and international that require different requirement levels, giving us extensive experience in dealing with different types of clients while still maintaining the highest quality.
- More than just a coworking provider: we have shifted towards an enterprise platform that provides additional services and values to members and creates communities.
What is the percentage of freelancers, SMEs and multinationals from the total of occupiers, and how did these types of occupiers change over the last few years? What fitting option/package do most occupiers chose from your current service offerings?
Our clientele has been shifting towards MNCs over the last 3 years. Up to this moment, MNCs clients take up to 60% of our spaces, where the number was just <5% in 2017. Serviced private offices and virtual offices are our top chosen services, due to flexibility and financial-saving reasons.
Many large enterprises face business challenges due to the pandemic, from both growth and operational interruption perspective. In order to support business continuation plans, enterprises have to adopt new solutions, such as A/B working shifts or split ops. Traditional offices are inflexible in scaling up/down, or bearing high risks of closedown.
What are the challenges you face with regards to market oversaturation, high competition or lack of vacancy, and how do you deal with them?
The pandemic poses new challenges to the office industry. Vietnam faces both a lack of vacancy and demand shift at the same time. On the one hand, Vietnam has the lowest office supply per capita in the Southeast Asia region, whereas the demand remains strong. Given that, the office occupancy has averaged 90% plus high over the years.
On the other hand, due to the Covid-19 pandemic crisis, the office occupiers demand flexibility over any other considerations. Enterprises make it hard to forecast future growth and tackle operation interruptions, which lead to an increased demand for short to mid-term office needs. Furthermore, new trends such as split-ops or A/B work shifts have become popular in the enterprise community to support business continuation plans (BCP).
We forecast a growing need for due to business continuity plans becoming popular in enterprise communities in the region. However, I don’t have a detailed report on the matter.
Obviously, the latest developments and social distancing measures in Vietnam due to Covid-19 impact the coworking industry among others. What measures is Circo undertaking to stay focussed and competitive in the current situation and how do you forecast the short to medium term impact on the industry in Vietnam?
Offering our members a safe place to work in is our top priority at the moment. We have escalated hygiene and cleaning requirements to assure the safest workplace for our members.
We strongly believe that in the next 12-24 months, the demand for flexible workspace will lead the office market due to the subsequent recovery of the enterprises and the economy after the current lockdowns and social distancing measures.
The above discussion is part of an ongoing multimedia series covering the coworking and flexible workspace industry in Vietnam initiated by Acclime, supported by articles, discussion forums, podcasts, webinars and panel events.
The Vietnamese coworking market is growing exponentially as parties become more aware of the benefits this niche brings from a business and productivity point of view. Post Covid-19, the real estate market in Vietnam is expected to transform faster than ever before and will create the underpinning for the flexible workspace to become an industry standard alongside traditional offices, with a significant pivot on wellness, mobility and community engagement.
This presents a significant opportunity for investors to enter the market in Vietnam by taking advantage of the chance to consolidate and strengthen local brands, introduce new brands, and to compete with the well-established providers.
Download and view the Coworking & flexible workspace market insight (2020-2021) to gain valuable insights from our team of Vietnam experts here.