Asia Pacific outpaces the rest of the world in growth of flexible work spaces
Coworking and serviced offices in the region have grown by 150 per cent in three years, according to new report from JLL.
Demand for flexible offices – including coworking spaces and serviced offices – is growing faster in Asia Pacific than anywhere else in the world, according to new research by real estate consultant JLL. The region's stock of flexible floor space is growing at 35.7 per cent per year compared to 25.7 percent in the US and 21.6 per cent in Europe.
The report, which looks at major coworking and serviced office operators in 12 Asia Pacific markets, reveals that the number of major flexible space operators has doubled, while flexible floor space has increased by 150 per cent between 2014 and 2017.
"By 2030, flexible work spaces could comprise 30 per cent of corporate commercial property portfolios worldwide," says Jeremy Sheldon, Managing Director, Markets & Integrated Portfolio Services, JLL Asia Pacific. "Although corporate adoption is still in its early days, there are certain factors that will continue to make this region a hot spot for coworking growth."
A key driver, says the report, is that governments are encouraging entrepreneurship to offset the slow growth in traditional industries such as manufacturing, and are offering financial resources and backing for small companies, many of whom locate in coworking-style spaces.
For example, in Singapore, the government has supported the development of flexible locations such as the JTC LaunchPad, which is home to a number of tech start-ups. Similarly, the New South Wales government supported the development of Sydney Startup Hub, a 17,000sqm tech zone catering to aspiring entrepreneurs. Meanwhile reforms introduced by the Japanese government to improve work-life balance and productivity are also pushing domestic companies to explore more flexible ways of working.
The report also identifies plug-and-play simplicity as a factor in the growth in corporate demand, particularly for larger companies. The ability to move in and out of an office at short notice, and avoid complicated contract negotiations and fit-out work is a convenient option for many occupiers.
At the same time, businesses are looking to encourage collaboration among employees and are using shared workspaces as a way to foster innovation through exposure to new ideas and ways of working.
"Some companies have even started their own internal coworking facilities, or have incorporated features of flexible space into existing offices to make the work environment more engaging. This helps to build a community feel and can be a differentiator when it comes to attracting and retaining young talent," says Susan Sutherland, Head of Corporate Solutions Research, JLL Asia Pacific.
However, there remain some barriers to the widespread use of flexible space. Large corporates place a high value on retaining their brand identity and culture as well as the need to protect data and secure their IT infrastructures.
"Cultural norms may also impact the adoption of flexible space in the region. With a more hierarchical corporate culture in Asia that is not always in sync with the casual environment of many coworking hubs, providers may need to adapt to cultural preferences to ensure a smoother transition to flexible working for some corporates," explains Ms Sutherland.
Implications for real estate investors
In response to growing demand, JLL notes that landlords will continue to form joint ventures with coworking operators, or create their own flexible space offerings to meet tenants' needs. Meanwhile developers are adapting to what could be a new standard in property development whereby flexible workspace will be an amenity as essential in a commercial building as food and beverage outlets or a gym.
"Given the competitive dynamic of this new sector, we are already seeing consolidation even among the biggest players. Looking ahead, we can expect convergence to continue growing, with serviced office operators developing coworking brands and coworking brands targeting the clients of serviced operators in the market," concludes Ms Sutherland.
For more information, download ''Spotting the Opportunities: Flexible Space in Asia Pacific'' now.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.
About JLL Thailand
The firm’s operation in Thailand began in 1990 and today is the country’s largest international property service provider with 1,600 employees and more than five million square metres of property and corporate facilities managed. In Euromoney Real Estate Survey 2018, JLL was voted as Thailand’s number one overall real estate advisor for the 8th consecutive year and also won top votes for agency/letting, research and valuation in the same survey. The firm was also named Thailand’s five-star winner in the commercial property consultancy and commercial real estate agency categories at the International Property Awards Asia Pacific 2019/2020. For more information, visit jll.co.th.