There has been a lot of noise in the media recently about the flexible workspace industry, and for good reason. It is a segment of the commercial office industry that can no longer be ignored or thought of as a passing fad. It is here to stay and growing. Tenants want it, landlords need it and flex space providers are taking up space – a lot of it – to position themselves well for future demand.
“In 2018, we saw incredible growth in the Sydney CBD flexible workspace market of 47% due to aggressive expansion from operators,” Sami Schiavi, Flexible Workspace Specialist at Colliers International, says.
So, what is the secret to its success? Why are more and more businesses becoming attracted to flexible workspace and why are building owners now seeing this as a must have amenity? Ms Schiavi says the answer lies in the name – flexibility.
“Looking at it from the perspective of a tenant, the options are endless,” Ms Schiavi says. “With over 50 operators in the Sydney CBD market alone, running over 100 centres on various business models with different services and amenities, there is quite literally a solution to suit any business of any size within any industry.”
On the chance that a business doesn’t quite fit an out-of-the box solution, spaces can be tailored to the tenant’s needs. Increasingly, corporations are getting in early at new centres and receiving bespoke fit outs to their exact requirements.
“The level of privacy, security and communal space can also be customised all on flexible lease terms and lengths,” Ms Schiavi says. “And a big draw card for tenants is the fact that they don’t require a bank guarantee.”
Landlords are also increasingly becoming participants in the sector as a way to ensure the shifting demands of tenants are met. Building owners are expanding their flex offering within their assets, be it through their own brands or by partnering with flex space operators.
“This has been driven by the increase in demand from larger corporations taking up desks in customised suites in flex space centres and the fact that flexible workspaces have become a staple building amenity in the eyes of tenants,” Ms Schiavi says. “And we expect this demand to gain momentum throughout the rest of 2019 and beyond.”
2019 is set to be another big year for the flexible workspace sector. However, even tighter vacancy and limited new supply may ultimately limit deal flow, which may lead to some operators having a closer look at the North Sydney, City Fringe and Metro markets.
Notwithstanding this, already to date in 2019 JustCo has completed two deals in the CBD, IWG has secured a major site at 60 Martin Place for their flagship Spaces centre, Campfire have secured a centre in Pyrmont and The Hub will be opening in Customs House.