Property 101: Office parameters changing amid rise of co-working phenomenon: CBRE

The workplace is in a state of evolution, with the rise of co-working space redefining the parameters of office markets across the country as shifts in demand create new opportunities for commercial property owners.

A new CBRE Viewpoint highlights the rapid transformation of global office markets over the past five years, with businesses and individuals adopting co-working space models such as serviced offices and flexible desk leasing arrangements.

Since 2010, there has been exponential growth in the number of co-working sites across Australia, with advances in technology underpinning a rise in mobile and freelance working.

Across Australia, there are currently more than 120 co-working sites, with the majority located in New South Wales (30%) and Victoria (25%).

CBRE Research Analyst Anne Flaherty said technological advances were creating new business opportunities, which was spawning a rise in the number of start-ups.

“For these businesses, serviced offices present an attractive option, offering flexibility, affordability and the opportunity to meet and work amongst other entrepreneurs,” Ms Flaherty said.

“For many small businesses and start-ups that may not be in a position to commit to the requirements of a formal lease agreement, co-working spaces offer significantly greater flexibility.”

CBRE Director, Workplace Strategy, Matt Strudwick said technology had liberated organisations from the traditional view of the office being the place to work.

“Organisations are using a mix of spaces to provide an attractive proposition to their employees, service their clients more effectively and drive out some of the fixed costs of traditional office space,” Strudwick explained.

“Employees have been empowered to work from client locations and from home in the past, but co-working spaces offer something more. Co-working spaces are conducive to fostering and enhancing an entrepreneurial culture and a sense of team.”

“While the co-working office offers an attractive work space for start-ups and small businesses, it is not just these companies that we are seeing demand from,” Strudwick explained.

“There is a growing trend whereby big corporates are leasing desk space in co-working hubs, so as to expose their employees to new ideas and innovative working environments.”

Evidencing the trend, a number of major corporations, including NAB, have taken to co-working to drive their business outcomes with the objective being to engage with the small business community and find opportunities to partner with, or buy their ideas.

“There has been a sharp increase in the number of financial institutions partnering with existing co-working hubs, as well as launching shared office spaces across most of Australia’s capital cities,” Flaherty said.

“Co-working spaces are also being set aside at the existing office premises of some banks, for the exclusive use of their business banking customers.”

Strudwick said in addition to the benefits of flexibility, affordability and networking, co-working style office arrangements also offered businesses the advantage of agility.

“Agility is one of the biggest drawcards associated with co-working space, with it giving businesses the ability to adjust their space as they grow, shrink, move and reconfigure, while not being locked into a restrictive lease,” Mr Strudwick explained.

CBRE Executive Managing Director, Capital Markets, Mark Granter said the growing trend also presented opportunities for office owners and landlords looking to reposition assets for higher and better use.

“As demand continues to strengthen for flexible office space, assets that have been converted to capture this budding market will be positioned for capital growth,” Granter said.

“Unlike traditional office space, income flow for a co-working space is less dependent on a few, or single, tenants. With demand for serviced offices growing, owners of currently underused commercial assets may look to unlock value by considering the potential viability of conversion to a shared office space.”