Changing spaces: Key trends reshaping flexible workspace in 2018

Colliers International launches 2018 APAC Flexible Workspace Outlook

Sydney, March 14, 2018 – A new survey has found flexible workspace is increasingly becoming the new norm among office occupiers across the Asia-Pacific region.

In a survey of Colliers International’s top 200 occupiers throughout the APAC region, for the company’s 2018 APAC Flexible Workspace Outlook report, 56% said they were already using flexible workspace in some capacity and 91% of the remaining respondents were considering using flexible workspace.

According to the Colliers International report, flexible workspace has evolved into a fundamental part of the commercial real estate market, growing in size and importance to both landlords and occupiers alike.

Strong interest from multinational corporations for flexible lease terms continues to be a key driver for increased demand in flexible workspace centres across Australia.

Doug Henry, Colliers International Managing Director of Occupier Services, said constant expansion and increasing competition were driving the continued evolution of the flexible workspace sector.

“Over the last 18 months, flexible workspace continued to gain momentum across Sydney and Melbourne; At last count there were 52 flexible workspace centres in Sydney and 47 centres across in Melbourne,” Mr Henry said.

However, as Sydney and Melbourne markets continue to tighten, we expect to see the appetite and growth of flexible workspace to increase into other major markets throughout 2018 as more and more operators establish themselves in Australia, particularly in areas like North Sydney, Parramatta, Perth and Brisbane.”

The report found a number of key trends, as well as threats and opportunities, were reshaping this rapidly evolving sector. This included:

Continued Evolution
Adam Raap, Colliers International National Director of Occupier Services, believes flexible workspace
has become an essential amentity for many occupiers seeking office space across Australia.

“When looking for an office building to relocate too, tenants are expecting to have access to third spaces, shared spaces or flexible workspace when they need it,” said Mr Raap.

Flexible workspace operators and landlords with their own flexible space offerings are steadily building out their solutions.

“Across the Asia Pacific region we are seeing operators and landlords integrating lifestyle, wellness and technology elements to differentiate their offerings and meet occupier demand,” Mr Raap said.


Some operators are transforming their locations into fully integrated lifestyle environments boasting health, entertainment and other amenities. Operators are also becoming increasingly conscious that many occupiers are attracted to the less tangible aspects of a space — particularly the innovation, creativity and opportunities for collaboration that spring from dynamic communities.

Lease Accountancy
New global accounting standards that will require businesses to disclose their leasing commitments
could spur demand for flexible workspace as companies act to keep debt off their balance sheets, but
the trade-offs may not be as straightforward as they initially appear.

The report found regulatory changes should have a positive impact on the flexible workspace sector overseas, pushing multinational corporations to take less core space on traditional long-term leases and rely more on flexible workspace operators to provide the flexible space to deal with temporary headcount swings and, in some cases, the amenities that an occupier may have previously selfdelivered.

Threats and Opportunities
As the flexible workspace sector evolves, it is both supported by and under pressure from, market
trends, changing regulations and shifts in the composition and expectations of end users. How
operators, landlords and occupiers respond to these realities will dictate how flexible workspace
develops going forward.

“Landlord interest in the sector is growing, many Australian landlords have been looking at how they can integrate flexible workspace services into their buildings; by either supplying the service themselves or parterning with an operator to deliver flexible workspace ,” Simon Hunt, Colliers International Managing Director of Office Leasing, said.

“Finding the right balance between providing an amenity and a commercial operation can be difficult for landlords; particularly if they lack the necessary economies of scale and geographical spread for multi-location enterprise occupiers.”

Operators across APAC are hoping to cultivate a multinational client base, but as more large companies occupy large desk counts within flexible workspace locations, there is a fear that they will simply become repackaged office buildings with end users existing in silos, reducing their appeal and collaboration aspects alienating the start-ups that create the buzz of a community and bring muchneeded innovation.

Opportunities do exist amidst these challenges, which are likely going to be the potential for landlords and operators to forge partnerships and complement each other’s core strengths via new hyrbid models.

Alternative Leasing Models
Flexible workspace is also enabling innovative leasing models that reflect the increasingly dynamic
and decentralised nature of business.

“As the Sydney and Melbourne markets have tightened, flexible workspace has continued to be a
feasible way to achieve flexible lease terms; particularly for larger organisations”, Mr Henry said.

In the “Flex and Core” model, a company combines a long-term lease with a traditional landlord for its
core space (e.g. headquarters) and an agreement with a flexible workspace operator to accommodate
sudden changes in headcount. This allows firms to deploy additional resources for projects or surges
in demand with minimal overheads.

The “City Campus” model allows businesses to expand quickly across cities and international borders
by supplementing a central location or headquarters with a digital platform that enables staff to access
temporary hot desks or private offices across multiple flexible workspace locations.

“As represented in our recent survey results a high number of our occupier clients are already using or considering using flexible workspace in some capacity,” Mr Henry said. “First-tier cities in China as well as key emerging markets including Jakarta, Bangkok and several Indian cities could lead the future growth of flexible workspace in the Asia Pacific region and they are certainly ones we’ll be watching over the coming years.”


Read and download Collier’s full report here.