Flexible spaces are the future of corporate real estate
WE have heard a lot about flexible workspace – in particular coworking – and its rapid emergence in urban centres around the world, and most recently in Asia-Pacific. According to latest JLL data, the facts are staggering:
Flexible space has grown in the Asia-Pacific by nearly 36 per cent annually while the United States and Europe saw an annual increase of over 20 per cent from 2014 to 2017.
The stock of flexible floor space in the Asia-Pacific increased over 200 per cent from 2014 to Q1 2018.
Over the past couple of years, we have seen the entry of international operators and the expansion of home-grown Singaporean operators such as The Great Room and JustCo. South-east Asia has been named as a target for growth for international operators such as WeWork, which has committed US$500 million to its expansion plans in the region.
While flexible options in the form of serviced offices have been common for years, the advent of coworking has had a significant consequence: providing impetus and inspiration for corporates to transform how they view their portfolios and office space. The trend started with the tech sector, and gathered pace when coworking operators such as WeWork launched in the early 2010s, encouraged by the tailwinds of the gig economy, tech-enabled flexible working and increased emphasis on the employee experience in response to the war for talent. This has put the spotlight on the importance of the workplace for real estate and corporate executives alike.
After building their presence in the market supported by freelancers and startups, coworking operators are increasingly pursuing larger enterprises and tailoring their offerings accordingly. For them, larger enterprises provide a more stable and secure source of income.
For corporates, on the other hand, the attractions of external flexible spaces are clear. Spaces with designs that appeal to younger demographics and provide interaction with other tenants, particularly those in tech or creative fields, can potentially bring an innovative jolt.
One of our clients who has used flexible space “sees it as a way to revitalise their company’s culture”.
On the practical side, it can improve overall agility and reduce the perceived hassle of negotiating leases and investment in fit-outs, freeing up capital. Through organising social events as well as engineering collaboration areas, flexible space providers are perceived to have mastered the art of building a sense of community.
Many of our corporate clients have told us that they see a place for flexible space in their portfolios. Even when leasing traditional offices, tenants want to locate in a building with flexible facilities integrated. But doubts remain about how to maintain brand culture and identity, as well as concerns about information technology security and confidentiality, in a shared space.
However, the question on the minds of many in corporate real estate is: Does this mean that companies will move an increasing proportion of their employees to external coworking spaces, or will they incorporate the best features of coworking into traditionally leased spaces?
The answer is not clear yet, but we know that flexible working options are increasing. Landlords are developing their own offerings, as well as including coworking facilities and shared meeting spaces in their buildings to attract and retain tenants.
So what does the future hold for the corporate workplace? The evidence that we see so far indicates that times are changing. As more companies start to embrace creative and collaborative areas combined with social and community elements, it is apparent that flexible spaces are here to stay as an integral part of corporate real estate portfolio strategy.
The Business Times, 11 Aug 2018