Asia’s burgeoning tech sector is becoming a dominant force in the region’s office market as both start-ups and established companies take an increasing amount of space in a growing number of cities.
“Tech companies are now a key demand driver across Asia Pacific,” says Christopher Clausen, Senior Research Manager for JLL Asia Pacific. “Markets in both China and India have reported rapid growth from tech firms.”
Across major Indian cities such as Mumbai and Bangalore, the tech sector has the biggest share in office occupancy, ranging from 35-percent to 40-percent.
Other cities are keen to carve out a niche as an emerging tech hub. “While it’s difficult to pinpoint exactly where future growth will take place, a number of cities in countries such as China and Thailand are taking steps to prioritize growth of tech firms,” Clausen says.
One such city is Chengdu, one of China’s 11 national software industry bases. With a flood of domestic and international tech companies setting up bases in the city, it’s positioning itself as a tech hub that can compete with the established tech centers of Beijing and emerging centers in Shenzhen.
Chengdu is currently home to the Tianfu Software Park Lab, an incubator to over 100 tech start-ups, providing them with office space, recruiting services, and government-subsidized amenities. Other developments designed to boost the city’s innovation credentials are on the way, such as the Singapore-Sichuan Hi-Tech Innovation Park, due to be completed by 2020.
Bangkok is also setting itself up as a future tech hub. Underway is the True Digital Park, a center that will cater to tech companies. To be completed in 2018, the development is part of the country’s drive to become a digital infrastructure hub in Asia.
Room for growth
As the tech sector – and the companies within it – continues to evolve at a rapid pace – they have specific requirements of their workspace. Flexible spaces are a top priority. “This is related to the growth of the company,” Clausen says. “They want a flexibility to the space that allows for more efficient use as the firm grows.”
This might mean looking for an office which has potential to accommodate future expansion and a layout that can be adapted easily as their needs change. And this can often favour particular types of office space – especially in dense cities. “In Singapore, buildings with more efficient floor plates are winning out over older buildings,” Clausen says.
Take Google’s Singapore office, which was relocated in November 2016 from Asia Square Tower 1 to the new Mapletree Business City — more than doubling the amount of available floor space.
Newer developments also provide tech firms with other building features they need, such as emergency power backups, energy efficient technologies, and better internet connectivity.
“Developers have taken note of these needs,” explains Clausen. “They’ve provided newer buildings, with more efficient floor plates — and these are more popular with occupiers in general.”
Attracting top talent
If the tech sector is to stay at the top of its game, it knows it needs to consider its access to potential hires. “In terms of location choice, we find that tech firms tend to set up in areas where it’s easy to find skilled talent. This is a key determinant of location choice across the region,” says Clausen.
One of the reasons why Bangalore, which is home to international and Indian tech giants including IBM, Yahoo, and Infosys and is known as the “Silicon Valley of India”, is because of the strong talent pipeline. Research from benchmarking and reporting software company Compass, found that of twenty other start-up hubs around the world, companies in Bangalore took the second shortest space of time to hire employees – largely due to the city’s substantial educational ecosystem, which includes at least twenty engineering colleges and thirteen universities.
Its popularity is reflected in its real estate market. “Bangalore has strong demand and growth from IT and IT enabled services firms. This has led to vacancy rates declining to the lowest level in the last decade,” Clausen explains.
However, for some start-up tech companies, high demand and rising rents in many tech hubs are leading them to seek out alternative office space. “Tech startups may be limited by costs and settle for lower quality buildings or lower quality areas,” Clausen says.
One solution is coworking, which is growing more common in Southeast Asia. In some cities, such as Singapore, the concept is evolving further into into co-living spaces — multiple-bedroom condominium units where tech entrepreneurs can live, work and play together as they look to create the next big thing in the tech world.
For both start-ups and establish tech firms, the need for spaces that encourage collaboration, allow for flexibility and attract the next wave of workers in Asia’s rapidly developing tech scene has never been greater.