KR Space Stuggle Continues as Staff are Laid Off Due to Lack of Funds
Hong Kong, currently undergoing a decline in economic clout, continued to make drastic changes just a month removed from a lease deal at The Center. The company decided to make staff cuts, according to Mingtiandi, while adjusting projections to fit their modest timeline.
It brings yet another unused office space for use in other purposes, as buildings re-made into something else. There are others, like CapitaLand, who prefer to remain true to the course. Their serviced apartment division has instead increased its global portfolio to 100,000 rooms.
Meanwhile, in China, co-working is losing popularity as data centers and other safe investments are gaining ground. SCMP stated that KR Space, one of the biggest co-working space firms, have begun to scale down their operations, and that included available staff in the office. Their expansion plans have also been put on hold for the time being.
At least 40 companies sharing the same sector as the firm has ceased operations as the months went by. From January to October 2018, these companies slowed down or have disappeared altogether. It didn't bode well for the projects in this sector that were ongoing. 40 percent of the projects have gone half-empty, according to an analysis done by the China Real Estate Chamber of Commerce (CRECC).
Fresh financing loss, as well as non-profit, has been the killer for these start-up companies. More than 3.94 million square meters or close to 520,000 desks are discarded in China's first-tier territories alone. Co-working firms, without funding, virtually lacked the needed money to engage in a 'price war' started by other companies such as the US-based WeWork. The co-working space company has started to move into cities such as Beijing and Shanghai since last year.
KR Space, meanwhile, owns 300,000 sq meters of space already. Plans for expansion have been put on hold for the time being, with priority shifting to other more profitable projects such as data centers and similar assets. To do that, however, the company is cutting off 'overlapping' business positions in a bid to lessen the company's expenses.
It does help that HK's office space rents are also set to rise. The Central is predicted by Nomura to have a 5% price hike in rent. It may be wiser to go for co-working spaces, and it might finally be the silver lining that KR Space is waiting for.