CDL-backed Distrii opens Singapore flagship space
By Timothy Tay
/ EdgeProp |
With Singapore property giant City Developments as partner and investor, the China-based co-working operator unveils ambitious expansion plans beyond the mainland
The already-busy walkway at the side of Republic Plaza in Raffles Place is even busier since Hans im Glück, a German gourmet burger restaurant, opened recently. Notably, the restaurant shares the same main entrance as the much- anticipated Singapore flagship centre of the Shanghai-based co-working operator.
Spanning six levels — from the second to the seventh — of Republic Plaza, Distrii will occupy a total area of 62,000 sq ft. There will be 900 work stations, private offices and customisable team spaces for between 15 and 50 members. Even before its official opening in July, the space is already 60% pre-leased.
Distrii Republic Plaza is already 60% pre-leased (Pictures: CDL and Distrii)
The space taken up by Distrii was formerly occupied by the Bank of Tokyo-Mitsubishi, an anchor tenant at Republic Plaza. Early last year, City Developments Ltd (CDL), which owns the 22-year-old Grade-A office tower, announced a $70 million refurbishment that includes sprucing up the façade and driveway, renovating the office lobby and common areas, as well as upgrading the lift system and raising the building’s technical specifications to stay competitive with the newer Grade-A office buildings.
It was also early last year that CDL announced that it had invested RMB72 million ($15.1 million) for a 24% stake in Distrii. The Singapore property giant participated in a second RMB200 million investment round by Distrii last September, bringing its total investment in the latter to RMB102 million. This makes CDL the second-largest shareholder in Distrii after its founder and CEO Hu Jing.
‘Unique angle’
“We invested in Distrii because we saw that it had a unique angle to co-working and technology offerings that is superior to its competitors,” says CDL group CEO Sherman Kwek.
Hu Jing, Distrii CEO and founder (left), and Sherman Kwek, group CEO of City Developments, at Distrii Republic Plaza (Picture: Samuel Isaac Chua/The Edge Singapore)
Besides CDL, Chinese billionaire Ji Qi, founder and executive chairman of hotel chain Hua Zhu Hotels Group (formerly known as China Lodging Group), was an angel investor in Distrii. Other investors included California-based investment and engineering firm Junzi Capital, which contributed to the Series A investment round that was led by Shanghai Hefu Investment, a unit of mainland property group Jingrui Holdings.
Distrii founder Hu is a trained engineer. In 2016, he left a high-flying career as chief architect and youngest executive vice-president of Shanghai-based property developer Greenland Group to start Distrii. Besides Hu, other founding members of Distrii include real estate and technology veterans from Regus, Vanke and CBN.
“That was another reason why I selected Distrii,” says Kwek. “There are synergistic core businesses that we have in common, such as real estate and hospitality.”
Track record in China
Kwek’s confidence in Distrii also stems from the latter’s track record. “At every location it has opened, it has taken an average of three months to cross 80% occupancy and become cash-flow-positive,” he says.
From just one co-working centre in Shanghai, Distrii now has a network of more than 30 centres, with over 450 companies and 15,000 members. Besides Shanghai, it has a presence in Beijing and Hangzhou. And now, it has expanded to Singapore.
Distrii’s Hu says the company is more than just a co-working operator. He sees it as “a transformative force in the future workplace”.
CDL’s Kwek agrees. “Distrii offers a com- prehensive suite of technologies that is built in-house.” For instance, the IT team at Distrii designs its own proprietary technology and applications. “I have been to many of Distrii’s China locations and I am able to walk in by just scanning a QR code using my mobile phone,” notes Kwek. “I’m then automatically connected to all the building’s networks without the hassle of inputting multiple passwords.”
The staircase spanning the third to seventh floors of Distrii Republic Plaza
Distrii has a customised app that is available to all members, allowing them to gain access to the different centres, unlock meeting/conference rooms and even make use of the lockers. Members can also share files during their meetings and make changes in the files instantly, which will in turn be transmitted immediately to all other members at the conference call.
CDL and Distrii have also struck an exclusive IT joint venture to create similar applications for CDL’s investment property portfolio, starting with its office buildings. “We hope that through these services, we can increase the ‘stickiness’ among our tenants and encourage them to stay in our buildings and, hopefully, renew their leases,” says Kwek. “At some stage, we will transplant similar apps to our residential properties as well.”
‘One-stop office service provider’
The general perception is that co-working only appeals to start-ups, but large corporations such as Microsoft have also located their marketing, design and R&D teams in co-working spaces, notes Kwek. “This alternative workspace helps enhance their staff creativity as well as enables collaboration, provides convenience and flexibility,” he adds.
The event space on the second level is open to all members of Distrii
In five years, Distrii will no longer be just a co-working operator; instead, it will offer a full suite of office services that will transform the company into a “one-stop office service provider”, says Jo Hu, Distrii Singapore CEO.
Distrii does not see other co-working operators as competitors, according to Hu. This is because it offers solutions for traditional office landlords looking for tenants to fill shadow space as well as tenants looking to sublet underutilised office space.
Hu points to a case in Beijing in which a well-known Chinese design company owned a building in the CBD with more than 230,000 sq ft of space but needed only 15% of the area. As real estate was not the firm’s core business, it engaged Distrii as a partner to manage the building. About 30% of the space was used for Distrii’s co-working centre, with the remainder leased to other occupiers, which also had access to the co-working space and Distrii’s other services. It was able to more than double the rate of return on the property for the company.
Part of the communal space at Distrii Republic Plaza
According to Hu, Distrii is generally able to generate a 30% to 50% higher return for commercial building landlords than traditional tenancies. He is confident that this business will appeal to commercial building landlords in Singapore as well as elsewhere in the region. Kwek agrees. “I have been to locations in China where the original tenant has sublet some of its space to Distrii because it can generate a higher return from the space,” he says.
Singapore and beyond
Distrii Republic Plaza will draw a different member profile from that in its centres in China, which tend to attract technology-related companies, says Kwek.
International blockchain incubator BitTemple has taken up the entire fifth level at Distrii Republic Plaza. “While I see a few tech companies such as BitTemple coming in, there will be a fair share of traditional MNCs and financial institutions, given that Republic Plaza is in the Raffles Place, the heart of the CBD,” says Kwek.
Monthly membership fees for the standard hot desks at Distrii Republic Plaza start from about $500, while dedicated desk memberships start from $750 and private offices, from $900.
One of the private office suites that can seat at least 15 people
There is also a virtual office membership that starts from $68 a month and includes the use of the business address and mailing services. A premium virtual office membership starts from $120 and includes access to Distrii business lounges in China as well as business centre services.
“We offer an online membership that allows members to work anywhere outside the centre and utilise our online office technology services to communicate and collaborate with their team,” says Distrii Singapore’s Hu. “We plan to expand our network of members beyond our physical centres.”
Singapore may be Distrii’s first overseas location, but the co-working operator’s ambition is to extend its footprint to other cities in Southeast Asia, Japan, Australia, Europe and North America by 2020. “The long-term vision I have for Distrii is to create beautifully crafted co-working spaces in gateway cities and to nurture a dense global network of future-ready working spaces,” says Hu.
This article appeared in the EdgeProp Issue #832 (May 28, 2018)
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