Flex appeal: Asia-Pacific’s rising flexible workspace market
It has long been recognised that Europe and North America have been well set in the flexible workplace market, while…
It has long been recognised that Europe and North America have been well set in the flexible workplace market, while APAC has been playing catch up. With Japan’s deep-rooted hierarchical workstyle and Singapore’s typical short lease modelling system, the APAC region seemingly didn’t have an interest in moving into flexible workspaces – until now.
New market research developed by flexible workspace solutions company Instant Group has found that the APAC region is fast taking the lead in the supply of flex space with an increase of 16 per cent in the last 12 months. Flexible workspace can include a range of spaces including co-working, executive suites, serviced offices and hybrid spaces.
Of the 340 flexible workplace centres identified by Instant Group in APAC, Hong Kong is currently the largest market for flex working. But it’s not just China’s thriving business districts that are adapting this new style of workplace – Bangalore, Singapore and Melbourne have also seen significant growth of more than 19 per cent in the flexible workplace market and, perhaps more surprisingly, Ho Chi Minh City in Vietnam has seen an impressive growth of 30 per cent in the market in the past year.
The total number of individuals placed in Asia Pacific’s flexible spaces has increased by 40 per cent in the last year alone and there are no signs of this trend slowing down.
The race for flex space
The APAC regional market has grown at a faster rate than any other destination across the globe in recent years. The only restricting factor is the availability of space itself. The rate at which flexible working demand is flooding Central Business Districts in APAC means that there is a serious issue of finding space to create new centres. This means flexible space will spill beyond key financial hubs into more diverse areas.
The growth of flexible working in APAC does not just stem from jumping on the bandwagon of flexible working as a global trend. This style of working is complemented by several socio-economic factors occurring in the region. Flexible workspace is well-suited to the driven, entrepreneurial business cultures of the region’s powerhouse cities.
In other global markets, landlords have been slow to recognise the threat posed by flex workspace and how best to cater to this demand. The fast growth of the market has created a buzz in the APAC region that landlords cannot ignore. WeWork alone has opened eight new centres in nine months in Singapore alone. This momentum is leading landlords to re-evaluate the leases they are offering tenants so that they can compete with the leaders in the flexible space market; in some cases landlords have even opened their own flex spaces (GPT and Dexus in Australia for example).
The future of flex
The growth of the flex market in Asia-Pacific is on a strong upward curve and there is evidence of significant demand. Big flexible workspace players are continuing to spread their presence in the region – WeWork, for example, is expected to double its presence in APAC within the next 18 months.
As conventional office rents continue to increase across APAC’s key cities, there will be an interesting shift in attitudes toward flexible space. It will lead to even more customers turning to flex solutions to try and avoid the effects of rapidly rising lease costs, but it will also inhibit the supply of new flex centres as the costs of occupancy increases for operators, which will inevitably impact their margins. This will affect where flex workplaces are located, particularly in Central Business Districts. But whatever scenarios unfold, one thing is clear: the region seems gripped by flex fever.