Singapore, March 16, 2017
- According to a new report from Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services, multinational corporations are reaping the benefits of using flexible workspace in Asia Pacific.
According to Colliers’ newly released Flexible Workspace Outlook Report, APAC 2017, in the past few years, the demand for flexible workspace has changed significantly. Flexible workspace had previously boomed across Asia Pacific, driven by growth in the contingent workforce and funding of start-ups, whereas, in the past two years, many operators have shifted their target market from start-ups to multinational corporations. As a result, transaction size has increased significantly – transactions involving 15 desks or more have almost tripled, now comprising 35% of deals, compared to only 12% two years ago.
Duncan White, Head of Office Services at Colliers International, Singapore, commented: “The demand for flexible workspace is expected to continue throughout 2017 as occupiers and landlords alike adopt the new working concepts. Traditionally, flexible workspace has served as swing space for firms requiring a temporary premise to operate their business in. Today, such workspaces are viewed as hubs for innovation and many multinational corporations have used flexible workspace to house growth or pilot project departments and initiative-driven business enterprises. Flexible workspaces are not just for small start-ups, funded or otherwise, but are also eagerly sought out by multinational corporations.”
Start-up growth in the region has been immense in the past few years, particularly in Singapore and China. However, multinational corporations have seen the benefits of coworking space as well, and are increasingly common users. This has led to a remodelling of spaces – converging traditional serviced offices and coworking space. The term ‘flexible workspace’ has arisen to encompass both.
Sam Harvey-Jones, Managing Director of Occupier Services, Asia at Colliers International, added: “In Asia’s competitive office market, we are seeing larger scale end users increasingly demand more flexibility with their workspace mix. They need innovative, dynamic environments to improve staff retention, access talent, and cross-sell opportunities with other end users. We see growth in this sector continuing, and landlords in Asia being increasingly receptive in order to diversify their portfolios.”
Multinational corporations have predominantly been attracted to flexible workspace by the ability to offer something different to staff. The flexibility offered, which, in turn, leads to cost savings – on average around 25% – is also an attraction. Furthermore, for requirements of 40 desks or more, 80% of deals globally are coming from multinational corporations.
Jonathan Wright, Associate Director of Regional Tenant Representation, Asia at Colliers International, added: “Utilising flexible workspace allows MNCs to unlock flexibility needed to scale up or down relatively quickly. 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. However, in the medium to long term we expect larger, mid-office teams to start moving to this type of workspace in order to unlock flexibility between core space and flexible space, achieve cost savings and create more collaborative work environments. In fact we have a number of occupier clients who have built in access to flexible workspace as part of their search criteria for new office accommodation – the growth in this sector is end user led.”
The recent growth of flexible workspace in Asia Pacific has been focused on Central and North Asia, along with major Australian cities. However, further growth in the region over 2017 and 2018 will be partly fuelled by an appetite from international operators to step into new markets, particularly South East Asian countries such as Indonesia, Malaysia, Philippines and Thailand, together with India. Growth of flexible workspaces in these markets is sustainable due to an increasing number of multinational corporations looking for space in South East Asia, and having a desire to mitigate risk. Flexible workspace will offer a good point of market entry with reduced capex, in comparison to conventional space.
2017 will also see a continued evolution of the sector and we will see more lifestyle concepts integrated into operators’ offerings. Wright added, “We are now seeing the sector move towards more holistic offerings, catering for the demands of today’s business environment to bring flexible workspace, food and beverage and wellness together. We also believe there will be a continued focus on technology – new ways of working are reshaping the way the office looks and how organisations interact. We foresee the scale of new openings to continue in an upward trajectory across Asia Pacific, particularly in China and more established markets.”
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