This article is from the Australian Property Journal archive
LOCAL and offshore flexible office space operators are growing their footprint across Australia, with the sector showing signs of recovery after a slower than expected return to office post-pandemic.
According to CBRE’s Australian Flex Space in the Age of Hybrid Work report, the flexible office market footprint has increased by 2.1% across the major east coast markets over the 12 months to June 2023.
Across these markets, total penetration of flex operators currently accounts for 2.7% of office stock, which is down from its 3.1% peak in early 2020.
CBRE’s 2023 Occupier Survey also showed that around 70% of Australian-based respondents currently have no exposure of less than 10% exposure to flex space.
Though is expected to plummet to just 41% in three-years-time as the sector matures.
“Office landlords are strategically embracing the evolving working dynamics by exploring innovative solutions such as flexible office spaces and third spaces within their buildings,” said Tom Broderick, Australian head of office research at CBRE.
“This shift is driven by the changing preferences of tenants and the recognition that providing adaptable and versatile work environments can enhance tenant satisfaction, attract new occupants, and ultimately add value to their properties.”
This comes after a report from The Instant Group found demand for flexible workspaces across the Asia Pacific region was up 16% in first half of 2023, reflecting rebounding occupier confidence in the market.
While Sydney is leading flex operator penetration at 3.2% down from 3.6% in June 2020, with Melbourne down from 2.9% to 2.2%, Brisbane is the only east coast market to record an increase over the three years, up from 2.5% to 2.7%.
The average flex centre size has also grown by 30% to average 2,300sqm, over the past three years.
The report also revealed that the majority of new Australian office developments are expected to include some level of flexible space, with some larger corporates requiring it.
“International operators now see Australia as a mature flex market offering growth potential and some are actively looking at opportunities, particularly in prime grade buildings,” said Sidharth Dhawan, Asia Pacific head of flexible real estate at CBRE.
Offshore operators currently make up over 50% of the flex footprint on Australia’s east coast following local operator consolidation.
“Evolving workplace dynamics have triggered the need for flexible space operators to rethink their offerings to remain relevant and appealing in a post-pandemic world,” added Dhawan.
“These offerings vary by tenure and customisation, ranging from “gym pass” like day memberships on the one end, through to fully turnkey managed spaces on the other.”
