Flexible workspace to reshape the office market

Multinational corporations to increase their exposure to flexible workspace

In 2016, the term "flexible workspace" became synonymous with start-ups, tech entrepreneurs and SMEs but in 2017, Colliers International expects an increase in multinational corporations adopting flexible workspace solutions as part of their overall workplace strategies.

Colliers International has released its Asia Pacific Flexible Workspace Outlook Report 2017, which identifies the top trends in the flexible workspace sector and provides a market snapshot for 12 global CBDs across the region.

“The number of flexible workspaces is on the rise and we expect larger corporates and multinational companies will increasingly adopt flexible workspaces as part of their overall real estate strategies, particularly in global cities like Sydney,” Colliers International's associate director for Tenant Advisory, Rowan Humphreys, said.

“In some precincts in Sydney’s CBD, we have seen rent increases of up to 30 per cent during the past year, meaning even the largest companies are now looking to offset the costs of a tightening leasing market, and a flexible workspace can deliver both financial and productivity benefits for occupiers.”

Across the greater Sydney area, the number of flexible workspace centres is estimated to be more than 100. In the CBD alone, it is estimated that 35,000sqm of office space is occupied by flexible workplace centres, equating to two per cent of the total Sydney CBD office market.

“Flexible workspace is not a new concept, with providers like Regus and Servcorp having operated for more than 25 years, albeit under the guise of serviced offices,” Colliers International's national operations director for Occupier Services, Adam Raap, said.

“However, the increased demand from occupiers in recent times has lead to an unprecedented rise in the number of providers, including new entrants like WeWork and Stone & Chalk.

“Traditionally, the market for flexible workspace has been dominated by SMEs, start-ups and companies entering new markets because it allows them to get up and running without significant overheads, while offering the added benefit of collaboration.”

“The next 18 months will see an explosion of new flexible workspace offerings and providers,” Mr Humphreys said. “In 2017, we expect to see about a 15 per cent increase in the total amount of space occupied by flexible workspace in the Sydney CBD.

“Recent deals include WeWork taking 4,300sqm at 333 George Street, Regus re-committing to 3,800sqm at Darling Park Tower 2 and 2,300sqm at 95 Pitt Street, The Executive Centre and Servcorp both opening centres at Barangaroo of approximately 2,000sqm each, and Gravity doubling its footprint in Sydney to 1,600sqm.

"In Melbourne, US provider RocketSpace has announced a joint venture with Dexus for a 5,000sqm facility aimed at tech start-ups.

“WeWork is expected to dramatically expand its footprint in Australia, with the recently announced deal at 401 Collins Street in Melbourne an indication of its plans. In addition, it is actively seeking additional space in the Sydney CBD and other providers, including Stone & Chalk, Fishburners and Tank Stream Labs, are also in the market for additional Sydney CBD space.”

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