In the past two years, we have seen many operators’ target market pivot from start-ups to multinational corporations, as a result, transaction size has increased significantly – transactions involving 15 desks or more now make up 35% of deals, compared to only 12% two years previously. Further, 80% of deals, globally, for 40 desks or more are coming from multinational corporations.
Multinational corporations have predominantly been attracted to flexible workspace by the ability it affords them to align with innovation, attract and retain talent, and to use these spaces to offer something different to staff. The flexibility offered, which in turn leads to cost savings – on average around 25% – is also an attraction.
These changes are nothing new – Servcorp, for example, have always had over 50% of their centres occupied by multinational corporations, outside of their home market, for branch offices and project teams, though the size of these is typically under 10 desks.
In all markets, traditional serviced offices have always been used for branch offices and project teams. However, the new breed of flexible workspace appeals to a wider cross-section of the market and we have seen instances of companies housing their whole operations within flexible workspace – an example of this would be Silicon Valley Bank using WeWork in several of their US markets.
In the short term, we expect more multinational corporations to place specific departments within flexible workspace – digital, innovation and technology teams would be most likely to move into these spaces, case in point being HSBC’s decision to take over 400 desks for their digital team in WeWork’s Tower 535 in Hong Kong, and EY similarly moving a team in Sydney to a coworking space. However, in the medium to long term we expect larger, mid-office teams to start moving to flexible workspace in order to unlock flexibility between core space and flexible space, achieve cost savings, and create more collaborative work environments.
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