The wake of the social distancing period of 2021 has proven a boon for Vietnam’s co-working industry according to a new report published this month by Acclime and Knight Frank Vietnam.

With total floor space totalling 135,500 square meters nationwide, almost two-thirds of which is located in Ho Chi Minh City, the sector is currently seeing occupancies exceed 80% for co-working spaces and flexible offices in leading Grade A and B buildings.

Buoyed by a seismic shift in the way Vietnam works, according to Acclime Vietnam’s Managing Partner Matthew Lourey, the coworking industry is leading “one of the greatest workplace transformations of our lifetime. How we work, learn, communicate, and of course, where we work, has been changed forever.”

The impacts of the pandemic on the way in which people view their workplaces and workspaces has proven a shot in the arm for an already booming sector. In 2019, according to data cited in the report, Vietnam was seeing a new co-working space open every seven weeks. While the rate of new entrants to the market has slowed from that pre-pandemic purple-patch, the industry’s record occupancy rates reflect a broader change in company cultures.

The work-from-home experience which permeated much of Vietnam’s 2021, and much of the past two years worldwide, spawned a shift in the way in which enterprises view the commercial real estate sector.

Greg Ohan, CEO & Co-Pioneer of The Sentry, which operates a 6,300 square meter space in central HCMC, and will soon cut-the-ribbons on three further locations in the southern metropolis, comments: “We are seeing a huge drive toward flexible and affordable workspaces from organizations nationwide. Companies are looking for spaces that can scale up with them, and do not want to commit to long leases and significant cap-ex for renovations and fit-outs. Enterprises are also focused spaces they regularly use – they don’t want to be carrying rental costs on rarely used meeting and function and training spaces, for example. They are looking to use those only when they need them, and not carry them month-to-month.”

“The term lengths of traditional office space have long been a cause of stress for early start-ups and entrepreneurs navigating their business operations in their first few years. Flexible offices offer timely solutions by allowing occupiers to move straight in, scale their space according to their headcount, budget accordingly with an all-inclusive cost, and stay flexible with much shorter contracts than typical traditional office lease. Especially for start-ups who may not know what their headcount is going to be in a year’s time, having that level of flexibility is imperative for their ability to either grow or downsize if needed,” noted Knight Frank Vietnam Managing Director Alex Crane.

In the face of this new normal, many companies have vastly revolutionized how they work. The hybrid working model has been rolled out to provide employees with the utmost flexibility when it comes to working hours, office settings and cultural engagement. A survey from McKinsey found that organizations that introduced more specific policies and approaches for the future workplace have seen employee well-being and productivity rise.

Still, the report did note several drawbacks to co-working, notably a lack of a brand ID for occupiers, the possibility of shared facilities being occupied or unavailable at peak times, the risk of distractions in open spaces, as well as some privacy concerns were all highlighted by the report.

The report highlights MNCs, entrepreneurs and start-ups as key sectors finding themselves drawn toward co-working, a finding that Ohan’s experience mirrors, citing larger, regional companies with local operations of up to 50 staff, notably in the tech sector – as a sweet-spot for The Sentry.

According to Crane: “Flexible space in Vietnam is not only an important tool for corporate occupiers looking at more hybrid-driven workplace models, but also to the growth of Vietnam’s impressive start-up scene. Five months into 2022 alone, Vietnam recorded 62,961 newly established with total registered capital of 471.2 trillion VND. Many will register their company at a co-working space, which they then come to occupy for their fledgling enterprises. We expect the entrepreneurial nature of the Vietnamese population to continue to underpin the need for great flexible space and this, of course, will be supplemented by multinational corporations who are continuing to both expand in and arrive as new market entrants to Vietnam.”

Crane further notes the exceptionally high occupancy of Ho Chi Minh City’s commercial real estate sector as an external driver for growth in the co-working space. Knight Frank’s recently released property report for 2Q22 cited Grade A and B vacancy rates for the city at below 10 percent citywide. But aside from the raw dynamics of meterage, the community spirit that permeates the coworking environment was cited heavily by the report throughout as a key market driver for the sector and one of the key reasons why four out of every five hot-desks in the country are currently occupied.

“Flexible offices are not simply a place of work, but a community-focused hub, where occupiers can interact with each other in an organic way, forming new social and professional habits, as they discover new ways of communication,” Lourey said.

The full report can be downloaded here.