Colliers International reports more than 35,000sqm leased to co-working organisations
Rob Joyes, Colliers International National Director of Office Leasing, said the rise of co-working was not only confined to CBD office markets.
“This global phenomenon has been aggressively consuming large amounts of office space in metropolitan locations in recent times,” Mr Joyes said. “In Victoria in particular we have 35,600sqm leased to co-working or flexible working organisations in the last two years alone.
“This includes the Waterman Group and Victory Corporate Serviced Offices (VCSO) leasing a combined 9000sqm across two buildings at Chadstone Shopping Centre, and Waterman taking another 7000sqm at Caribbean Park in Scoresby.”
Another popular location is Richmond, where The Commons, Creative Cubes. Co and the Regus-run SPACES have taken up around 6,500sqm between them.
Co-working spaces were popping up Collingwood (WeWork and The Commons), South Melbourne (The Commons) and Fitzroy (UnitedCo).
“Flexibility is not new when referring to real estate requirements, however, we expect this trend will proliferate in 2018 throughout the office sector in co-working spaces, and in particular with co-working providers targeting major corporates as opposed to just start-up companies like we have seen in the United States,” Mr Joyes said.
“In addition, the flexibility trend will extend to occupiers sub-leasing space to co-working providers which will result in productivity enhancements as well as increased opportunities for innovation.
“Building owners and occupiers will also consider “placemaking” a core component of the future strategy for any commercial building and workplace.”
Waterman Business Centre’s Chris Jbeily said co-working, and more specifically flexible workspaces, were already an established industry in overseas markets with both small business owners and large corporates making the move to these spaces in a bid to increase productivity and staff satisfaction and provide room to grow.
“In this era of budding entrepreneurship and the increasing ease and convenience of starting a new business, there are more and more people taking the leap into following their dreams and starting a small business,” Mr Jbeily said. “With this, an increase in demand for modern and flexible workspaces is created.
“Business owners and entrepreneurs want a space that not only gives them a desk to work at but also matches their style of working, induces creativity and fosters relationships with other businesses that they can use for support, partnerships and social interaction.”
Mr Jbeily said the continued strong growth of Melbourne as a city had motivated Waterman Group to look beyond the CBD and into the burgeoning city fringe and outer suburbs for new locations.
“There’s no doubt that the population of Melbourne is rapidly increasing,” he said. “Studies suggest that Melbourne will overtake Sydney as Australia’s largest city in the next 10-15 years.
“This growth in population is mostly seen in the fringe and outer suburbs of Melbourne, as affordability and accessibility of real estate is evident there.
“With this growth rate, commuting into the Melbourne CBD is becoming more of a struggle and workers are looking for alternative locations to work from to avoid the hassle. This can be seen in the increase in large corporates either moving their head offices to locations outside of the CBD or offering their employees incentives to work remotely when needed.
“The choice to open business centres in these strategically placed locations in the fringe suburbs of Melbourne comes down to the convenience for businesses and the larger spaces available.”
According to Colliers International data, 86% of all enquiries for metropolitan office space in the first two months of the year have been for sub-1,000sqm space. The majority of enquiry was coming from Business Services, Media & Advertising and IT tenants, with hot spots including the eastern fringe – particularly Richmond and Cremorne – and the outer eastern suburbs.
“In Australia, top ASX companies under pressure to drive revenue and bottom line profit growth are shedding non-core business activities in order to save costs,” Mr Joyes said. “Companies are stripping back to core business activities and utilising the skills of consultants and freelancers on an as-need basis, which is driving demand for co-working space across both CBD and metro markets.”
Tim Farley, Colliers International National Director of Tenant Advisory, said flexibility could take a number of forms.
“While occupiers seek to leverage workplace culture and flexibility within their tenancy as a means of attracting and retaining the best talent, similarly, landlords are looking to incorporate coworking flexibility to their buildings and business parks as a means of attracting and retaining their tenants,” Mr Farley said.
“Some mutual advantages of coworking flexibility to a landlord and tenant can be an improved ability for tenants to reduce the net lettable area of their premises where the availability of bookable meeting spaces from a coworking provider can provide a viable alternative for costly underutilized board rooms and the like.
“Likewise, tenant expansion or project requirements can often be accommodated through a coworking provider on flexible terms otherwise aligned with the tenant’s lease.
“So, whilst there is a perception of many that coworking spaces typically cater to start-ups and incubators, larger tenants and landlords alike can also benefit from the flexilibility they provide as a means of reducing cost and future-proofing their accommodation strategy.”