Colony @ KL Sentral announced in late August that it would be shutting down and ceasing its operations in September 2021.
The post thanked customers for their support over the years and mentioned that those still keen on using their coworking services may do so at Colony’s 4 other branches in Star Boulevard, KLCC, KL Eco City, and Mutiara Damansara.
At the time of writing, Colony @ KL Sentral is now listed as permanently closed on Google Maps. As it was in a central hub for commuters, it was targeting the global crowd consisting of expatriates and internationally-focused startups. With travel restrictions, there’s no doubt that the branch would’ve taken a major hit.
Cutting costs never meant undermining quality
“About a third of Colony’s core revenues come from rentals of our event spaces, and by February [2020] we were getting cancellations on our events citing fears of the virus,” Colony’s CEO, Timothy Tiah (Tim) wrote last year.
In the same article, Tim also said that Colony’s plan for the pandemic would be to never cut costs in a way that undermined the brand’s quality. Seeing that Colony is a luxury coworking space, that is a tall order.
My colleagues have experienced Colony’s hospitality firsthand multiple times, and have said that its services are truly on a different level. In line with its aesthetics, you get service of a quality that’s on par with what you’d expect from a 5-star hotel.
Even on a pre-pandemic basis, there’s no doubt that it was no small cost to pay the rental of its spaces, maintain the upkeep of the environment as well as ensure its employees are well paid. Prior to the pandemic, back in July 2019, Tim had even implemented an RM3K starting salary for all employees, regardless of their experience.
We’re unsure if this remained unchanged throughout the pandemic, but it was a clear indication that Colony places a lot of importance on ensuring its own team is looked after.
By shutting down Colony @ KL Sentral, it can now channel its resources into the other branches, instead of diminishing the quality of services or cutting down on team members.
The coworking industry in Malaysia would’ve been hard-hit by the worsened pandemic in 2021, and Tim shared more of his experience in a LinkedIn post where he said:
“One of our locations went from pulling a significant profit every month to losing a material amount in just a matter of months. We knew that while we could stomach the loss in the short term, it was unsustainable if events continued to be banned for an indefinite period.”
While it is not known if he was specifically referring to Colony @ KL Sentral in the post, it’s likely most coworking spaces in Malaysia would have experienced something similar.
Uncertainty is the keyword for the industry
Coworking spaces lost their main revenue streams during the first MCO as events were banned, and most companies began WFH. However, there was a small glimmer of hope sometime in 2020 as the economy began recovering, aided by the drop in daily positive COVID-19 cases.
Analysts were optimistic that coworking spaces would be the future of office spaces, as they predicted that long-term WFH would not be sustainable. People also preferred more flexibility in their working locations, and coworking spaces could fulfil this demand. It seemed to be the answer for employees who wanted the best of both worlds.
For businesses, coworking spaces offer flexible membership options which can be cheaper than renovating and renting a dedicated office space. Coworking spaces also provided better social distancing abilities, which was a factor that led to its forecasted uptake in 2020.
“Additionally, many have offered promotional rates to attract new members and to discourage existing members from cancelling their memberships,” said real estate consultant, Teh Young Khean, to The Edge in October 2020.
Then came 2021, when COVID-19 cases got out of hand, and things got worse. The nation went under a stricter lockdown, and most people were forced back into WFH, accepting it as the new norm for the long term. But it doesn’t seem like people are content with remaining WFH forever, and the demand for coworking spaces hasn’t exactly diminished either.
Elice from MyOffice Coworking Space Puchong told Vulcan Post that during the times they were given the green light to operate, members were keen to return as they found WFH less efficient.
Co-labs Coworking also reported that it’s been seeing a steady stream of enquiries and bookings for its temporary remote offices, workspaces for a hybrid workforce, as well as flexible and affordable office passes even in 2021.
These point to the likelihood that people are still looking for and willing to work in coworking spaces once it’s safe to do so again. There will always be demand, but for some coworking spaces, other factors may affect its business continuity.
For creative coworking space A SPACE TO_ in Damansara Uptown, it decided to focus on a more lucrative business: its design services. So, it’s entirely shut down the former and returned its focus to the latter, which was its main source of income even pre-pandemic.
Of course, these responses are a very small sample size of how the local coworking industry is doing, and no definitive data can be derived from them. However, it’d be safe to conclude that individuals and businesses are keen on returning to the coworking life, though it may take some time and an improved situation before they commit to doing so.
Which coworking spaces remain will simply depend on who can hold out until Malaysia has the pandemic under control, and which ones even think that the end is worth holding out for.
As COVID-19 is expected to go from being a pandemic to an endemic in Malaysia by October 2021 while the nation continues its vaccination programme, only time will tell what the future of work will really be.
- You can find out more about Colony coworking space here.
- You can read more of what we’ve written on Colony here, and about coworking spaces here.
Featured Image Credit: Colony