Cost efficiency has been a crucial factor for corporations and individuals to consider when leasing offices due to a continued rise in rental costs and an economic slowdown at home and abroad.

As a result, a number of corporations have adopted and embraced the idea of mobile desks to reduce office rental expenses, particularly for employees who operate in sales and business development.

The majority of companies still favor having an office in a major business district such as the Central Business District or the Gangnam Business District, but the shifting focus on cost efficiency is leading companies to consider using a serviced business center as an alternative to an office building leasing.

Changes in the working environment are also helping to fan the demand for business centers.

For the next five to 10 years, it is expected that employees will heavily utilize portable work devices such as tablets, laptops and smartphones so they can work freely in diverse and secure office environments without limitations to location and time.

Among the major clients for business centers in Korea are multinational corporations in the initial stages of their business. These companies start out in business centers with a minimal number of employees to test the waters while avoiding high start-up costs.

Once the decision is made that operations are to be continued and expanded, these companies are more likely to become a major tenant in the same building. Hence landlords should focus on this incubating capability of business centers to help reduce the overall number of vacancies in their buildings.

Demand for business centers is growing throughout the world. In Asia-Pacific alone, there are about 100 business centers in the major business districts of Singapore and Hong Kong and the number is expected to grow. The serviced business center market is now emerging mainly because of a growing number of small-scale global corporations entering and expanding their business.

Riding on the growth outlook, business centers invest heavily in self-marketing to drive growth and sales and to make clients (including landlords and tenants) well aware of their brands, which benefits the landlord by providing opportunities to attract prospective tenants.

In line with the market demand, global business office brands, including Regus, are speeding up business expansion in Korea, while seeking partnership with landlords to minimize the risk and reduce initial start-up costs and vacancy rates. If landlords share these initial risks with the business offices based on long-term contacts, they can enjoy mid- to long-term benefits by securing stable income.

The potential growth of business centers in Korea will have a positive impact on property agents like us. Cushman & Wakefield Korea has increased its resources for connecting major business center brands with local tenants and landlords. 

By Tony Yoon, Head of corporate occupier & investor services

(Cushman & Wakefield Korea)

This article was contributed by Cushman & Wakefield Korea. ― Ed.