Today’s dramatically evolving business environment has changed the way people work.  As well-established companies continue to expand, new ones are emerging. But as corporations and start-ups look for ways and means to drive business growth, two interrelated considerations remain: (1) provide the ideal work environment for employees to work efficiently and productively while (2) avoiding unnecessary costs.


As such, office leases and workspaces have transformed to meet these standards. Lease terms must not be onerous that companies use more space or pay higher rents than necessary, for a period that is longer than required. Just as importantly, workspaces in the twenty-first century must meet the employee requirements that include spacious work areas which allow increased productivity, an interesting workplace ambiance which promotes creativity, strategically situated office furniture which foster work efficiency and collaboration—all of which in a location that is not only easily accessible, but also reflective of the company’s brand. Ultimately, all these elements should create value, and provide savings to companies and individuals alike. Thus, it is not surprising to see the increasing popularity of flexible workspaces in recent years.


There are three major classifications of flexible workspaces: serviced offices, hosted services firms, and co-working spaces. It must be noted that all three types provide the basic needs of air conditioning, a workstation, and fast internet. Understandably, there may be some overlapping services across types, but each has unique characteristics that consequently define the profile of their clientele.


Category

Serviced Offices

Hosted Services

Co-working Spaces

Year of Entry

1999

2008

2011

Location

Primarily major CBDs

Some CBDS; Mostly fringes

Some CBDS; Mostly fringes

Building grade

Mostly A; some B

Some A; mostly B

B only

Typical size

1,000 to 1,500 sq m

More than 2,000 sq m

Less than 200 sq m

Primary  tenants

MNCs, traditional companies

BPOs, small Traditional companies

Freelancers, start-ups

Unique characteristics

Prime address, access to multiple sites worldwide

Provision of non-core or back office services

Allows collaboration with others users; regular events and seminars

Average cost

PHP19,000 per seat per month

PHP14,000 per seat per month

Daily use at PHP500 per seat


The growth in the flexible workspace segment in the local market has been undeniable. The number of flexible office space operators has reached over 60 at the end 2016. This is a significant jump since the industry’s beginnings when serviced office Regus opened its first site in 1999. Today, the estimated total stock of flexible workspaces in Metro Manila has reached 228,000 sq m (2.5 million sq ft). Colliers expects this number to grow by 10% annually in the next three years, as demand for co-working spaces is spurred by a millennial-dominated labor force.


We identify five (5) key drivers in the growth of the sector: (1) multinational companies (MNCs) using the space; (2) business process outsourcing’s role in the local market; (3) emergence of start-ups and freelancers; (4) importance of technology; and (5) growing millennial workforce.

Given these drivers, Colliers expects the current flexible workspace stock in Metro Manila to grow by at least 10% annually in the next three years on the back of a faster growth from co-working spaces, due to the following reasons:

  • Co-working is still in its early stages in the Philippines
  • Serviced offices and hosted services firms find themselves participating in the co-working segment
  • Co-working provides the cost advantage that is important in a market characterized by increasing rents

The challenge for both operators and developers is to adapt to the demands of the market to either remain competitive or participate in this growing sector. Colliers believes that flexible workspace operators can consider buying office spaces and converting them to co-working spaces; or partnering with developers to mitigate the impact of increasing rents. On the other hand, we encourage developers to dedicate co-working spaces in their buildings to take advantage of the sector’s growth.


To view the report click HERE.


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Colliers International | Manila 11F Frabelle Business Center, 111 Rada Street Legaspi Village, Makati City 1229 Philippines | Tel: +632 888 9988