PUBLISHED ONJune 30, 2024 6:38 AM
COMPASS OFFICES HIGHLIGHTS RISING DEMAND FOR FLEXIBLE WORKSPACES IN APAC WITH 13% GROWTH.
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Demand for flexible office space increased by 13% in the Asia-Pacific region over the past five years, according to real estate strategy firm Instant Group, with Auckland and Seoul experiencing the most robust gains.
The growth in demand came despite a subdued market for the APAC region in 2023, due to several challenging business conditions, according to Real Estate Asia, an industry publication. The Europe, Middle East and Africa (EMEA) and the Americas regions fared better, reporting 35% and 59% increases in demand growth, respectively, over the same period.
Auckland and Seoul were the APAC region’s winners, with demand growth of 22% and 20%, respectively, over the past five years. Other growth markets included Shanghai, Jakarta and Mumbai, the Real Estate Asia report said.
Others in the region did not fare as well, as markets faced headwinds while the flexible workspace sector matured, evolved, and adapted to new ways of working.
Hong Kong, Sydney and Melbourne, for example, were impacted by lower-than-expected demand reporting declines of 8%, 7%, and 7%, respectively.
“While demand has been slower than originally expected, it's still up across APAC over the last several years, showing resilience compared to the conventional office market,” said Sean Lynch, Instant’s chief customer officer for APAC and EMEA.
A recovery and uptick in the market across APAC is expected mid-year, he added.
The cost of a single flex desk is another metric that businesses should keep their eyes on when making plans for the future. Instant said that desk rates in the APAC region have fallen as operators have cut their prices to retain clients. For example, in Kuala Lumpur, the cost in 2023 fell 32% from a year earlier to an average of US$365 a month. Desk rates are down as well in Jakarta, Mumbai and Bangalore, though they are up from a year earlier in Metro Manila, Singapore and Sydney.
Businesses across the region are also monitoring the market supply for flexible office space. The market has grown by only 2% over the past five years across the APAC region, with many stagnant markets.
APAC highlights in terms of supply include Tokyo, Seoul and Kuala Lumpur.
But on the sunny side, the Instant Group’s Future of Flex Survey says this is expected to change in 2024, with 67% of operators disclosing that they expect to increase their footprint over the next two years.
A spokesperson from Compass Offices elaborated, "Despite challenges, the Asia-Pacific flexible workspace market shows resilience with ongoing demand growth. Businesses should monitor flex desk costs closely. With an anticipated increase in market supply, the future looks promising for flexible workspaces in the APAC region."
The strategic implications of these trends are significant for both large and small enterprises. As more organizations recognize the advantages of flexible workspaces, such as scalability and lower overhead costs, the shift towards these types of offices could accelerate. This transition aligns with the increasing demand for hybrid work models, where employees balance time between home and office settings. As a consequence, real estate developers and investors are reevaluating their portfolios to better align with these changing requirements.
Contact Info:
Name: Amy Lam
Email: Send Email
Organization: Compass Offices
Website: https://www.compassoffices.com/en/
Release ID: 89134265
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