Soho China bets big on co-working sector with move into second-tier cities

Name: SCMP
Telephone: +852-2680-8888

Commercial property company to establish its 3Q shared office space brand in Hangzhou and Nanjing

Reading Time:2 minutes

Why you can trust SCMP

The co-working concept allows start-ups to save money on overheads by sharing a flexible, modern work environment with staff from other companies. Photo: Simon Song

Zheng Yangpengin Beijing

Published: 5:46pm, 25 Sep 2017Updated: 10:59pm, 25 Sep 2017

Soho China, one of the country’s largest commercial property companies, is taking its co-working space business into second-tier cities, amid fierce competition to take the lead in the burgeoning sector.

Young people in second-tier cities have no major differences from their counterparts in Beijing and Shanghai

Pan Shiyi, chairman, Soho China

The firm is taking advantage of the vast amounts of office and retail space standing idle in second-tier cities, announcing on Monday that it is entering Hangzhou and Nanjing with its 3Q shared office space brand. Until now it has operated 19 centres in Beijing and Shanghai, offering a combined 17,000 seats for clients.

It said it has also earmarked several potential sites in Guangzhou, Shenzhen, Wuhan and Changsha, where it is in talks to launch 3Q.

“Second-tier cities in China are fraught with astonishingly high vacancy ratios, in some cases over 50 per cent,” said chairman Pan Shiyi, who had just finished a month-long reconnaissance trip to Wuhan, Hangzhou and Nanjing. “At the same time, we found huge underlying demand for new-generation offices. Young people in second-tier cities have no major differences from their counterparts in Beijing and Shanghai.”

Pan Shiyi, chairman of Soho China, said ‘second-tier cities in China are fraught with astonishingly high vacancy ratios.’ Photo: SCMP Handout

Soho China is betting big on the increasing popularity of co-working spaces, in which start-ups save money on overheads by sharing a flexible, modern work environment with staff from other companies. It leases whole buildings en bloc at discounted prices, transform them and sublet them to small tenants.

This is a major shift from Soho China’s past strategy of buying and operating offices, as it tries to adopt an “asset-light” business model.