Ben­e­fits and traps of co-work­ing

Sunday Star-Times - - COMMERCIAL PROPERTY - CHRIS HUTCH­ING

The rapid growth of flex­i­ble work spa­ces has ac­cel­er­ated in big cities and is chang­ing the struc­ture of of­fice leas­ing.

In a new re­port, CBRE says that although there have been many re­ports from the per­spec­tive of ten­ants there are ma­jor im­pli­ca­tions for land­lords.

In the first half of 2018 about 15 per cent of of­fice leas­ing trans­ac­tions in­volved flex­i­ble spa­ces in the Asia Pa­cific re­gion.

Smaller co-work­ing oper­a­tors were less prof­itable than larger ones ca­pa­ble of sur­viv­ing busi­ness cy­cles.

Flex­i­ble workspace has be­come a catch-all term to en­com­pass any of­fice space leased for a short pe­riod of time, whether on a deskby-desk ba­sis or on a larger scale, CBRE re­searchers said.

From 2019, In­ter­na­tional Fi­nan­cial Re­port­ing Stan­dard 16 will change ac­count­ing prac­tices for oc­cu­piers of real es­tate, elim­i­nat­ing off-bal­ance sheet re­port­ing and re­quir­ing them to recog­nise most leases on bal­ance sheets as li­a­bil­i­ties.

Since any lease obli­ga­tion of less than 12 months is ex­empted and can still be booked as an ex­pense, CBRE ex­pects more oc­cu­piers to look for shorter-term leases in flex­i­ble spa­ces.

‘‘De­spite their un­ques­tion­able en­thu­si­asm, oc­cu­piers hold sev­eral con­cerns about flex­i­ble space, at the fore­front of which lie the per­ceived lack of data se­cu­rity and pri­vacy.

‘‘Among large cor­po­rates, wor­ries typ­i­cally fo­cus on the po­ten­tial di­lu­tion of their cor­po­rate cul­ture when lo­cat­ing em­ploy­ees in flex­i­ble space, as well as po­ten­tial cul­ture clashes with other oc­cu­pants.’’

These con­cerns, along with the avail­abil­ity of spe­cific ameni­ties, plus acous­tics, er­gonomics, and em­ployee health and safety con­cerns, pre­vent many ten­ants from in­creas­ing their amount of flex­i­ble space

Own­ers of prime build­ings – new or re­fur­bished with high spec­i­fi­ca­tions – ben­e­fit less than own­ers of sec­ondary grade build­ings where flex­i­ble spa­ces can achieve an in­crease in value of 5-10 per cent be­cause rents can be dou­ble that of tra­di­tional leases.

Glob­ally, China and In­dia have the big­gest flex­i­ble work­place mar­kets with smaller amounts in Aus­tralia and New Zealand.

Most land­lords lease space to flex­i­ble space oper­a­tors, but some take on the risks and do it them­selves. Some­times a rev­enue­shar­ing agree­ment re­duces risk to both par­ties.

CBRE said leas­ing of flex­i­ble space usu­ally in­volved new ten­ants rather than re­lo­ca­tions, re­newals or ex­pan­sions.

Ad­vances in tech­nol­ogy are al­low­ing more em­ploy­ees per­mit mo­bile work­ing and com­put­ing, al­low­ing them to ac­cess in­for­ma­tion and work other lo­ca­tions. About 80 per cent of com­pa­nies have adopted mo­bile work­ing poli­cies.

Some com­pa­nies tra­di­tion­ally lo­cated in cen­tral cities are in­tro­duc­ing hub-and-spoke mod­els to re­duce their of­fice foot­print in ex­pen­sive ar­eas. Com­pa­nies are also us­ing free­lancers and in­de­pen­dent con­trac­tors.

In the short term, CBRE Re­search be­lieves the con­tin­ued ex­pan­sion of flex­i­ble space will drive a struc­tural shift in of­fice de­mand.

Re­searchers found 33 per cent of oc­cu­piers plan to in­crease their use of co-work­ing space, while an­other 15 per cent and 11 per cent in­tend to in­crease their use of in­cu­ba­tor cen­tres and ser­viced of­fices, re­spec­tively.

STUFF BEN LEVY/

The B:HIVE co-work­ing space at Smales Farm on Auck­land’s North Shore opened in De­cem­ber 2017 and has space for 150 busi­nesses and 1100 peo­ple.

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