Korean brands expanding footprint in the office-sharing market

[Photo provided by SparkPlus]

Local brands are quickly gaining grounds in the still-fledgling office sharing market in Korea.

FastFive, a Seoul-based shared office service provider, added five new co-working space locations in the first half of this year. It currently operates 25 office spaces and plans to open three more by the end of this year, according to industry sources on Sunday. The company aims to operate total 80 branches by 2023.

The company has been aggressively beefing up its business. Recently, it acquired FastCampus, an online learning service provider for adults, and launched a process to join the country’s tech-savvy Kosdaq market. The company is seeking initial public offering to raise funds for further expansion.

“We will move aggressively to grow our building and office solution business this year,” said Park Ji-woong, co-CEO of FastFive.

As a building solution provider, FastFive will lease an office building and turn it into shared office spaces by charging the landowner the renovation costs. The income from the shared offices will be split with the building owner. The office solution will involve designing and building shared office spaces for clients.

FastFive registered 42.5 billion won ($5.3 million) in operating income last year, doubled from a year earlier. Its income target for this year is 70 billion won, according to Park.

SparkPlus, an office sharing firm that Aju Hotel & Resort and local startup accelerator SparkLabs founded in 2016, currently has 15 branches, with four added so far this year. It plans to open two more in the second half of this year, and secure total 40 locations next year.

The company was the first in Korea to customize office settings for clients within its shared office space.

Local office sharing firms’ aggressive expansion contrasts with downsizing by multinational brand WeWork. The global player which operated 19 shared office locations in Korea as of end of last year added only one this year. It is reported that WeWork may dispose of low-profit locations in Korea. It has been restructuring its business across the world after its initial public offering failed last year. It had planned to secure liquidity to make up for mounting losses from aggressive expansions.

“WeWork tends to have a long term lease agreement of 10 years or longer with building owners while signing short-term contract of one to two years with its shared office tenants. This leads to quick deterioration in financial status when vacancy rate goes up,” said Kim Jae-hwan, head of real estate group at Deloitte Anjin. “Demand for shared offices is expected to increase on growth of startup businesses,” Kim added.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]