THAILAND’S office landlords have seen strong growth in the co-working market, with “manageable exposure” to struggling operator WeWork, according to a recent report from DBS analyst Chanpen Sirithanarattanakul.

This is even as the management reshuffle and failed listing at WeWork sparked concern about global landlords’ exposure to the troubled co-working operator – including in Singapore and Jakarta, where information technology firms have driven the take-up of flexible offices.

While WeWork’s woes have dimmed the lustre of the co-working sector, “mid-sized operators with a similar business model but smaller scale were growing less aggressively” and pose less risk of rental default to landlords, DBS analysts wrote in a recent report.

Thailand’s larger players include market leader Regus and Australia-listed Servcorp, as well as JustCo and Common Ground. WeWork, a newer entrant, has four spaces in Bangkok.

Notably, developer Central Pattana (CPN) last year took a majority stake in the Common Ground (Thailand) joint venture, along with Malaysian counterparts, with a mandate to invest 800 million baht in 20 co-working spaces across the country by 2023.

Meanwhile, JustCo’s aggressive Asia-Pacific expansion plans are backed by partnerships with conglomerates such as Sansiri and Fraser Property Group’s Thailand real estate unit, Ticon.

Most co-working spaces in Bangkok are still located in the central business district (CBD), especially along mass transit lines, such as in Sukhumvit, the DBS report noted. The floor area taken up by Thai co-working spaces ballooned fivefold between 2012 and 2018 – although it still made up just 1.3 per cent of Bangkok office space.

But the co-working market was also tipped as a key driver of office demand, accounting for about 13 per cent of annual demand for office space – roughly twice its share five years ago.

Real estate consultancy Edmund Tie & Co had said in August that demand for CBD office space will stay firm in the second half of 2019 as limited prime stock pushes rents upwards, with the new office space in the imminent pipeline largely from mixed-use developments.