Cost savings fuel demand for Johor Bahru’s shared workspaces

As businesses from Singapore and Malaysia turn to Johor Bahru in their quest for cost savings, the city is rapidly transforming into a regional hub and sparking a surge in the development of co-working spaces across Malaysia’s southern gateway.

Samuel Tan, CEO of Olive Tree Property Consultants, notes that the demand for co-working spaces in Malaysia’s southernmost state has increased in the last couple of years since the Covid-19 pandemic, with more local and international businesses setting up shop there.

“Although the rental for conventional office spaces is lower than [that of] co-working spaces, the flexibility, corporate solutions, and networking opportunities offered by co-working spaces are driving businesses to adopt the shared workspace concept,” he tells The Business Times.

Infinity8 co-working space in Johor Bahru / Photo credit: Infinity8

Lee Sheah Liang, co-founder and CEO of co-working space operator Infinity8, said the total number of co-working offices in the Greater Johor Bahru area – which covers Johor Bahru, Iskandar Puteri, Pasir Gudang, and Kulai – surged to more than 60 as of July this year, compared to fewer than five in 2017, when the company was founded.

“Nearshoring from Singapore to Greater Johor Bahru is a key factor driving the demand. Companies that do business with their Singapore counterparts are looking at co-working spaces in Johor Bahru to maintain a presence closer to their clients,” he explains.

Infinity8 started with three co-working centers in Johor Bahru and has since expanded to eight, along with additional locations in Kuala Lumpur and Penang. The occupancy rate of these spaces are above 90%, says Lee.

This year, the company plans to open another co-working center in Tampoi, a suburb near Pasir Gudang.

Rising economic hub

The Johor state government aims to position Greater Johor Bahru as Malaysia’s second metropolitan hub, bolstering the state’s economic growth.

Vijayakumar Tangarasan, Malaysia country manager at International Workplace Group (IWG), says the state’s co-working space industry is thriving, with strong interest from local startups as well as from companies in other parts of Malaysia, Singapore, and beyond.

“We have received an increasing number of inquiries on our co-working spaces since last year. [Positive developments] such as the Johor Bahru-Singapore Rapid Transit System and the Johor-Singapore Special Economic Zone (JS-SEZ) have fueled the interest,” he shares.

Johor-Singapore causeway / Photo credit: Shee Heng Chong / Shutterstock

Tangarasan also notes that many companies are waiting for updates on the JS-SEZ, and the demand for shared or flexible working spaces will likely accelerate once the two governments release more details. Last month, it was reported that a deal for the JS-SEZ was likely to be signed by November this year.

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