Flexible workspace company, The Executive Centre, has come a long way since its initial launch in 1994. In fact, the entire coworking and flexible working scene has completely transformed in the last three decades.
It was 29 years ago when Paul Salnikow, founder and CEO of The Executive Centre, opened the first branch of its flexible workspace in Hong Kong’s Bank of America Tower. Coworking wasn’t just a foreign concept in the world back then—according to Salnikow, it simply “didn’t exist.”
Thanks to the industry’s staggering growth in the last three decades, flexible workspace is no longer a foreign concept to most.
The Rise of Flexible Workspaces
According to JLL, the industry has been growing at an average annual rate of 23 percent since 2010. Currently taking up less than five percent of the commercial real estate market, flexible workspaces are expected to make up 30 percent by 2030, reported CNBC.
This data is no surprise to Salnikow. Currently, The Executive Centre has over 180 centres across 33 cities in the Asia-Pacific region, with twelve of them in Hong Kong, where the company’s HQ office is based. The company has also reported a US$283 million annual turnover, and a 20 percent growth rate a year.
Unlike other flexible workspace companies, coworking isn’t the main focus of The Executive Centre. Instead, multinational firms (MNCs) make up 76 percent of the company’s clients, with the majority renting private offices to work in.
The History of Coworking
“Prior to the millennium, coworking was known as hot desking,” said Salnikow. “It was a small minor product sold by serviced office operators or business centres such as The Executive Centre.” Instead, virtual offices were the most popular product then, according to Salnikow.
However, everything began to change when the Global Financial Crisis (GFC) happened in 2008. The unemployment rate rose around the world, and in the U.S., it doubled from five to 10 percent—but there was a silver lining: the emergence of the entrepreneur culture.
“People who were previously employed full-time in a company suddenly found themselves unemployed but still motivated, intelligent, and with ideas,” said Salnikow on the entrepreneurship wave.
It was also around that time when the tech boom began, making it easier for people to start their own companies. The demand for coworking spaces grew, and in the same year, Adam Neumann and Miguel McKelvey, the founders of WeWork, established GreenDesk, their first venture into the flexible workspace business before WeWork.
It’s been 15 years since the GFC and the flexible workspace business has transformed entirely. In Hong Kong alone, coworking companies are now found in every single district, with each featuring its own selling point, whether it’s catering to freelancers, luxury clientele, or to budget entrepreneurs.
A Hard Industry to Hack
However, despite the flexible workspace’s seemingly large demand, the industry is not always a profitable one.
WeWork is a prime example—since the company launched in 2010, its operations largely depend on raised capital from investors. According to The Wall Street Journal, WeWork recorded a negative cash flow of around US$4.3 billion between July 2020 and September 2022. During COVID-19, WeWork even dumped about a fifth of coworking space in Hong Kong, breaching lease agreements with landlords, reported South China Morning Post.
Other smaller flexible workspace companies in Hong Kong have also struggled, especially over COVID-19. The closure of Campfire, Paperclip Entrepreneur Campus, and The Crafties shows that success in the flexible workspace realm is more complex than simply renting out desks and office spaces.
To be successful in any industry, the ability to evolve with change is mandatory. Since the arrival of the global pandemic in 2020, the coworking industry has been forced to change with the world.
“If The Executive Centre stands still, we’ll be out of tune with the market within five years become a faded business. And so to avoid that, we have to constantly pay attention and evolve,” Salnikow said.
The Influence of COVID-19
What originally made flexible workspaces attractive—the lounges for mingling, beer taps, and a lively community—were suddenly seen as a threat to people’s health during COVID 19. “The new version [of coworking]is where you’re in a shared space, but you’re working from a desk,” said Salnikow. “Our space at 28 Stanley Street in [Hong Kong] was launched in 2021 during COVID, so it’s purely a product with no pre-pandemic history—and it’s super popular.”
Instead of seeing coworking spaces as a place to network, people are now more interested in the workspace aspect as a whole. “People have their headphones on, they’re focused on their screens but they’re in a shared environment. It’s got lockers, it’s got a few meeting rooms, a few soundproof phone booths. But it has no open hangout space. That’s kind of gone away,” he adds.
As the world returns to a new normal after COVID-19, the flexible workspace industry will likely change again.
“I think the social aspect is going to come back,” said Salnikow. Unlike the pre-COVID era where the majority of events were focused on business skills and management, Salnikow believes that future events will have a heavy focus on wellness instead.
“I think people are more aware that life is disruptive and at times, fragile,” said Salnikow on COVID-19. “You can’t just pursue the monetary goal without actually looking after yourself and your team.”
As for the future of The Executive Centre, Salnikow feels confident. After expanding into Dubai, Melbourne, Manila, Xi’an, and Abu Dhabi in the last five years, the company has plans to continue its expansion, opening new centres in Shanghai, Singapore, India, Sydney, and Guangzhou in the coming years.
“I like coming to work, I like doing what I’m doing. I think job satisfaction is very high. We employ about 1,200 people across the regions and I think for most of them, it’s true as well. I think that’s what keeps us here,” he said.
“I have no doubt that we’ll be here in five, 10 years’ time and we’ll be even bigger.”
