Why Colony is closing down its Star Boulevard coworking space that cost almost RM5mil to build

Plush couches, crystalline chandeliers, and gilded décor furnish Colony’s Star Boulevard outlet.

An events-centric coworking space, the space first opened at the tail end of 2019, built to the tune of almost RM5 million. I myself have visited a number of times over the years, whether that be for launch events or panel discussions.

Sadly, this luxurious coworking and event space will be closing in March 2025.

What happened?

Things were looking great for the space at first.

Colony, Malaysia’s hospitality-inspired coworking and event space destination, was booking various high-profile events at their location. They were set to make a return on investment in record time.

But then, as we all know, the unthinkable pandemic happened.  

At first, Colony founder Timothy Tiah had been a bit naïve, thinking it would just pass. But one month turned into two, and then soon enough, a year went by and things were still looking dire. Being so events-focused, it was difficult to book anything for the Star Boulevard location.

“At some point the hole was so big that it was inconceivable for us to continue it,” he mused.

If it were not for the pandemic, Timothy believes that Colony @ Star Boulevard’s fate may have been different.

After all, Colony’s Mont Kiara location is doing exceedingly well, and just like the Star Boulevard outlet, this is an events-focused coworking space.

“I think we’re going to make our money back within eight months or something like that,” Timothy shared about Colony @ The MET.

It’s an example of what Star Boulevard could’ve been. Their current office occupancy is close to 80%, which is impressive considering their rates.

The concept hadn’t been wrong—it might’ve just been the wrong place and the wrong time.

Cutting in good times too

The decision to close an outlet, Timothy said to Vulcan Post, is not an easy one.

“Mentally, you have to admit that you failed as an entrepreneur. Number two, you have to write off your books, have a paper loss of X amount of capex and renovation money,” he pointed out.

But to Colony, it’s actually a good thing because the loss can offset any tax. “Because we’re growing the company, we always try to be as tax efficient as we can and reinvest every dollar back into the business.”

Still, it’s a tough call to make. In his earlier days an entrepreneur, Timtohy used to always want to hold onto underperforming business units.

“Okay mah, the company can afford it, just hold on to it,” he said. “But more and more, it started to get more painful.”

One of two things tend to happen. Number one, the loss-making unit becomes even more loss making and the hole becomes bigger. Or number two, the profit-making units will start declining. And that’s when the whole business goes into a crisis.

“We’re already been here for five, six years. If we’re still not making a good return and there’s no way to get our investment back, we should just cut it off,” Timothy said.

And now’s a good time to do just that, especially because last year had been good for Colony as a whole, Timothy claimed.  

“I always believe in cutting not just in bad times, but in good times too.”

The sunk cost fallacy

But when do you know it’s time to bite the bullet? When is it right for you to give up on an outlet and cut your losses?

It’s always going to be difficult, Timothy empathised.

“Think about it as, you want to do it when you can do it rather than have to do it,” he said. “Cut when you don’t need to cut but when it is appropriate to cut.”

This mindset is what kept Timothy motivated to make hard decisions like closing Colony @ Star Boulevard.

Some people argue otherwise. Tim has met senior entrepreneurs who might say three years are not enough, and that some business owners are too impatient to wait for the profits.  

There’s no verifiably right or wrong way to do business, but the Colony founder believes in taking the emotions out of the decision, and simply following the numbers.

Not done “colonising”

Faced with a loss-aversion fallacy, Timothy believes that many entrepreneurs feel like, ‘Oh, we have to keep going to make the money back.’

But something that the Colony founder has learnt as an entrepreneur is that you don’t have to make the money back the same way you lost it.

With that in mind, Colony will be focusing on new openings, including new locations for their more affordable working brand, Jerry. The team will also focus on Dough by Meg, which they acquired last year.

Although Colony @ Star Boulevard’s journey will come to an end next month, the road ahead looks extensive yet for Timothy and his company.  

Featured Image Credit: Colony