CapitaLand Commercial Trust Peers into its Future and Sees the Sharing Economy

Earlier this yearCapitaLand Limited (SGX: C31) signed a joint venture agreement with Collective Works.

The 50-50 joint venture would turn the entire 12th floor of Capital Tower into a co-working space. The concept could see as many as 250 companies sharing office facilities on a single floor. Capital Tower falls under the ownership of CapitaLand Commercial Trust (SGX: C61U), a commercial REIT that is managed, sponsored, and partially owned by CapitaLand.

In its latest earnings briefing for its 2016 second-quarter results, CapitaLand Commercial Trust talked about the opportunity that co-working spaces offer. Lynette Leong, the REIT manager’s chief executive, said:

“For the co-working space, as you may know CapitaLand has entered into a joint venture with a co-working operator.

So, we are able to also – from there – see what new industries that come to the market. They are businesses which we – ordinarily for a traditional office lease, we may not be able to tap.”

The co-working space might be popular with smaller companies from the fintech, social media, and technology scene. Kevin Chee, CapitaLand Commercial Trust manager’s head of asset management, elaborated on the benefits of keeping tabs on emerging companies:

“What we see is that companies go through a lifecycle. They start small, and they grow over time, as they succeed, bigger. So, that is part of our strategy to capture and develop our tenant base and grow with them as they go through their company lifecycle.”

In short, a co-working space could be an incubator for emerging industries and companies that might need to transition to larger office spaces that CapitaLand Commercial Trust is also able to offer.

Leong talked about the benefits that a co-working space can bring for its tenants:

“A lot of the small and medium sized companies – when they are at the infancy, they want to be able to just focus on the business, and not have to worry about the office administration or fitting out an office.

So, they just want to just take their bags, go in and start working immediately. So, what they want is flexibility. Flexibility in the space requirement.

So, what we are moving towards is flexibility. Provision of flexible spaces, provision of flexible leases terms.”

This emerging trend might not be new. The sharing economy, which has seen the rise of services such as AirBnB (apartment rental) and Uber (ride sharing), appear to be making its way into office spaces as well:

“We are seeing that emerging and it’s really due to the sharing economy. People don’t mind sharing. And also the mobility of people and the future of work. So, we are monitoring the market carefully, and through this joint venture between CapitaLand and the co-working operator, we want to glean into what’s happening. ”

To be sure, Chee estimated that the co-working space market is still tiny in the grand scheme of things. Efforts in the area might also not show up in the financials. But, it could still be interesting for CapitaLand Commercial Trust to keep up with things.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.