“We are moving away from the growth driven by past scale and toward growth that creates sustainable strength.”
The shared office industry has moved beyond rapid growth and is now entering a phase where the true depth of its business foundation is being revealed. The past approach of rapidly and extensively expanding branches alone can no longer be used to predict the future. Growth unsupported by profitability cannot last.
SparkPlus has maintained its brand in a turbulent environment. It recently announced major decisions, including the full repayment of its convertible bonds, a restructuring of its investment structure, and the expansion of Office B, to improve its financial structure and secure new growth engines.
CEO Son Joo-hwan emphasized, “All of these choices are part of a process of improving the constitution to become a brand that will last for 15 or 20 years or more.”
"It's not a crisis, it's a process of maturity."
CEO Son doesn't view the current state of the shared office industry as a crisis. Rather, he sees it as an opportunity, a step toward industry maturity, from a long-term perspective.
"The shared office industry, after its rapid growth before and after COVID-19, is now at a point where the depth of its fundamentals is being revealed. More than sales volume, the strength of profitability indicators is becoming the determining factor for a brand's survival."
SparkPlus has prioritized operational quality, customer experience, and brand trust over aggressive expansion. While this may have seemed conservative, over time, it has laid the foundation for new expansion initiatives, such as partnerships with building owners, consignment operations, and profit-sharing models.
WeWork is now in its 15th year, and in Korea, SparkPlus is in its 9th year, and Fast Five is in its 10th. Maintaining a brand for nearly a decade in a rapidly changing environment is itself a remarkable achievement in this industry.”
Spark Plus is also taking a different approach to expanding new locations. The initial co-working space model involved long-term leases in buildings near subway stations, investing heavily in interior design upfront, and then leasing the space back. While this model offered the advantage of direct planning and control, the initial investment and fixed costs were substantial. In contrast, the consignment operation and profit-sharing model operates differently. The building owner provides the space, while Spark Plus provides the brand and operational capabilities, and the two share in the resulting profits.
"This significantly reduces the initial investment burden, and building owners can increase asset value while reducing vacancy and operational risks. This streamlines the company's financial structure, allowing them to focus more resources on operational quality and improving customer experience, which are fundamental competitive advantages."
"CB Repayment: Long-Term Stability, Not Short-Term Burden"
Spark Plus recently repaid the entire convertible bonds held by Mirae Asset Venture Investment. While some interpreted this as a significant short-term burden, CEO Son Joo-hwan explained it as "a preemptive decision to enhance long-term stability."
The key point is that even after the CB repayment, the company has secured sufficient cash for operating purposes, and branch operations are also operating stably. He explained, "Currently, the contract and occupancy rates are stable, and EBITDA is in the black, so cash reserves are steadily increasing every month."
The share transfer was also a natural consequence of SK Group's internal portfolio restructuring. The shift from SK Square to SK Planet as the largest shareholder actually increased the potential for creating new synergies with partners with data and platform capabilities.
"We anticipate that combining SK Planet's rewards and membership infrastructure, including OK Cashback, with Spark Plus's space and network of tenants will enable meaningful expansion in the tenant experience."
Misunderstanding Lease Liabilities: Operating Stability is Key
Due to the nature of the shared office industry, financial statements can appear to be heavily indebted. CEO Son clearly pointed this out.
"Since shared office spaces are a combination of rental and service businesses, it's difficult to interpret the accounting debt and actual financial burden equally."
A prime example is lease liabilities. These are rental payments due for the remaining lease term, recognized as liabilities at the current date according to accounting standards. While they appear significant in terms of numbers, they are distinct from actual business risks. When a lease term is 7 to 10 years, the entire rental payment for that term is recognized as a liability, and the corresponding interest expense is reflected in non-operating income.
"Therefore, when evaluating a shared office, it's important to consider not just the accounting numbers, but also how stable the actual operations are, and especially how well the vacancy rate is managed."
SparkPlus is proving this with operational metrics. Key locations in Seoul's core business districts, including Gwanghwamun, Seolleung, Samseong, Yeoksam, Gangnam, and Hongdae, maintain occupancy rates near 100%.
SparkPlus celebrates its ninth anniversary this year. Over the years, we've built long-term relationships with many tenants.
"Some companies have been with us since the very beginning, when we opened our first location in 2016. Nearly 40% of our tenants have been with SparkPlus for three years or more. Beyond simply renting space, the very fact that we've been together for so long is deeply meaningful."
As market uncertainty has grown in recent years, the concerns of tenants on the ground have become increasingly apparent. Rather than having fixed organizational sizes and staffing, they increasingly operate on a project-by-project basis or must quickly adjust to changing circumstances. When it comes to space, flexibility has become more important than size.
"Sparkplus's relatively flexible approach to inter-branch relocation and space size adjustments has been a real help to tenants amidst these changes."
People play a crucial role in maintaining the density of relationships. Community managers, who reside at all locations, go beyond simply managing the space and closely monitor the daily lives and workflows of tenants.
A recent customer satisfaction survey supports this. According to the survey, 98% of respondents said they would "recommend the service to a friend" or "would use it again." The most frequently mentioned strengths in the interviews were "an environment conducive to work" and "consistent cleanliness."
Office B: A New Standard in the Small and Medium-Sized Building Market
SparkPlus is strategically expanding Office B. While existing shared office spaces typically involve multiple companies sharing a single floor, Office B offers a unique model where companies with 50 or fewer employees can occupy an entire floor while still enjoying SparkPlus' operational capabilities and IT infrastructure.
As companies grow beyond 20 employees, the need for a space of our own becomes clear. However, for small and medium-sized businesses, taking responsibility for everything from interior design to operations and management can be a significant burden. Office B solves this problem.
Office B primarily targets small and medium-sized buildings located on back streets near subway stations. In the small and medium-sized building market, building owners face the risk of vacancy. Spark Plus manages the entire process, from planning to remodeling and operation, thereby enhancing the building's competitiveness.
"The response from the tenants' perspective is clear. They can work in privacy in a dedicated space decorated like a company building, while still enjoying the benefits of a shared office, such as cleanliness management, operational services, community, and IT infrastructure."
Having determined that demand and profitability have been sufficiently verified on the ground, we plan to further accelerate our expansion from next year.
CEO Son's mid- to long-term vision is clear: to expand SparkPlus beyond a simple office management company into a platform that helps businesses grow through offices.
"Sparkplus has always believed that the growth of our resident companies is directly related to our own growth. Our office is not simply a physical space where we sit at a desk and work; it's become a core stage for our company, where careers are built, relationships are formed, and experiences are accumulated."
Spark Plus aims to create more than just a welfare mall with a simple list of benefits. Our goal is to create a structure where residents naturally benefit from a better work environment, better experiences, and more connections with others.
"I want to provide an experience where simply choosing a space positively impacts corporate culture, employee satisfaction, and even the way we work."
CEO Son Joo-hwan sees "two pillars of trust" as the most important under his new leadership: building a company that possesses both brand power and profitability.
"Financially, we will focus on building a structure that allows us to grow on our own, based on consistent operating profits and stable cash flow, rather than a structure that is swayed by short-term performance. Regardless of how the external environment changes, our priority is to build a company with a solid foundation."
From a brand perspective, we aim to go beyond simply managing a space well and become a partner that designs and considers the growth process of tenant companies.
"Sparkplus's goal is not short-term profits, but sustainable growth through a business model that thoroughly achieves win-win outcomes for our business partners. Building on this foundation, I envision Sparkplus as a company trusted for a long time to come."
What CEO Son is building isn't rapid growth, but long-lasting strength. The trust built over nearly a decade of maintaining the brand, stable occupancy and financial structure, new market creation through Office B, and evolution into a platform—this is Spark Plus' map to sustainable growth. Focusing on direction rather than speed, now is the time to build lasting strength.
You must be logged in to post a comment.