World's Fastest Growing Market of Flexible Office Spaces is Here
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The demand for flexible and co-working spaces has grown by 150 per cent in three years, according to the latest report “Spotting the Opportunities: Flexible Space in the Asia Pacific” by real estate consultant JLL. The reasons for the rise in demand could be the number of companies expanding into the Asia Pacific region. The report shows that the Asia Pacific stocks of flexible working space are growing at 35.7 per cent per year, compared to 25.7 per cent in the US and 21.6 per cent in Europe.
The researchers of JLL Asia, Susan Sutherland, Christopher Clausen and Ankita Prasad find that the Asia Pacific reached an “inflexion point” in 2016–17, when international players such as WeWork entered the Asia Pacific market while local rivals including Beijing-based Ucommune, Singapore’s Justco and Hong Kong’s Campfire rapidly sprung up to challenge the US giant in the race to meet tenant demand for flexible office space
What is Fueling the Demand?
From 2014 to 2017, the number of co-working and flexible working spaces has doubled, as per the report. While recently a lot of international players have expanded into the Asia Pacific market, local players in the market are also expanding rapidly. One of the top international players like WeWork has entered into Asia Pacific market; besides flexible space operators such as IWG and The Executive Centre have been proactive since the 1990s in the Asian market.
A vibrant startup culture is also fuelling demand in emerging market cities such as Manila, Jakarta and Ho Chi Minh City. Overall, our analysis indicates that the total stock managed by major flexible space operators, including coworking and serviced office players, grew 150% from 2014 to 2017, with Auckland, Beijing, Bengaluru, Delhi, Seoul and Shanghai recording growth of over 100%.
Some of the core reasons that are fueling the growth are the flexibility, cost, simplicity and convenience, collaboration and innovation. According to the report, short-term contracts for commercial property work for the startups in the industry. “Some occupiers are moving towards a ‘core/flex’ strategy in which they take on a traditional office space lease for their core staff and lease workstations from a flexible space operator, ideally in close proximity to their core space, to accommodate headcount changes,” says the report.
To foster innovation in an organization, a lot of established organizations are also moving its team to co-working spaces instead of investing in commercial infrastructure as it’s much more convenient for entrepreneurs in terms of cost and other facilities. The report cites an example of JP Morgan Chase, which has renovated one of its floors and incorporated flexible design into its Chater House office in Hong Kong, to make the business more technologically-enabled and create a modern workplace that fits the preferences of its new generation of staff.