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Auckland

Asia Pacific outpaces the rest of the world in growth of flexible work spaces, Auckland is punching above its weight

Coworking and serviced offices in the region have grown by 150 per cent in three years, according to new report from JLL


 

 

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​Demand for flexible offices – including coworking spaces and serviced offices – is growing faster in Asia Pacific than anywhere else in the world, according to new research by real estate consultant JLL. The region's stock of flexible floor space is growing at 35.7 per cent per year compared to 25.7 percent in the US and 21.6 per cent in Europe.

The report, which looks at major coworking and serviced office operators in 12 Asia Pacific markets including Auckland, reveals that the number of major flexible space operators has doubled, while flexible floor space has increased by 150 per cent between 2014 and 2017.

"By 2030, flexible work spaces could comprise 30 per cent of corporate commercial property portfolios worldwide," says Mark Grant, Head of Markets, JLL New Zealand. "Although corporate adoption is still in its early days, there are certain factors that will continue to make this region, and increasingly Auckland, a hot spot for coworking growth."

The report also identifies plug-and-play simplicity as a factor in the growth in corporate demand, particularly for larger companies. The ability to move in and out of an office at short notice, and avoid complicated contract negotiations and fit-out work is a convenient option for many occupiers.

At the same time, businesses are looking to encourage collaboration among employees and are using shared workspaces as a way to foster innovation through exposure to new ideas and ways of working.

"Some companies have even started their own internal coworking facilities, or have incorporated features of flexible space into existing offices to make the work environment more engaging. This helps to build a community feel and can be a differentiator when it comes to attracting and retaining young talent," says Ben Dalton Head of Project and Development Services, JLL New Zealand.

However, there remain some barriers to the widespread use of flexible space. Large corporates place a high value on retaining their brand identity and culture as well as the need to protect data and secure their IT infrastructures.

In Auckland

JLL New Zealand's Head of Research Tom Barclay comments, "In Auckland, flexible space is growing at a rapid pace. JLL are currently tracking 45,000 square metres of operational flex-space and another 10,000 square metres currently in the development pipeline.

"We expect to see continued growth in flexible space. It is particularly suited to the New Zealand SME culture and this is underscored by the fact that many global companies have only a small presence in New Zealand, so having flexible or serviced office space makes sense from an operational and financial perspective.
"Demand is also coming from new companies looking to set up in New Zealand and require a 'soft entry' via flexible space as well as from more established corporates who are 'right-sizing' their businesses.
"Less experienced operators are now creating environments and communities that extol the benefits of coworking such as innovation and collaboration. These smaller operators are also the ones subject to takeovers from larger industry players," he says.

Implications for real estate investors

In response to growing demand, Barclay says, "Landlords will continue to form joint ventures with coworking operators, or create their own flexible space offerings to meet tenants' needs. Meanwhile developers are adapting to what could be a new standard in property development whereby flexible workspace will be an amenity as essential in a commercial building as food and beverage outlets or a gym" he concludes.

For more information, download 'Spotting the Opportunities: Flexible Space in Asia Pacific' now.