Co-working spaces gain traction in office market
Flexible workspace is increasingly enabling staff to work where and when they want – while also reducing rent costs for businesses.
Office tenants are leasing up to 10 per cent less space by moving to flexible workplaces for activitybased working and to share space.
CBRE head of research Zoltan Moricz said the rise in ‘‘agile’’ working was having ‘‘profound implications’’ on the office leasing market.
‘‘It’s no secret that the days of having your own desk or work station are becoming less common, as organisations look to more efficient use of spaces,’’ he said.
‘‘Unassigned seating is being implemented more widely, with more spaces being tailored towards a specific task, such as creative brainstorming.
‘‘What is interesting to see now is two main structural changes in the broader market that can be related to a change in space use by office occupiers.
‘‘The first is that demand among occupiers for high-quality new space is strong … [and] the second change is that a disconnect has emerged between employment and office space absorption.’’
During the 2000s, absorption growth exceeded employment growth, Moricz said.
‘‘Unassigned seating is being implemented more widely.’’ Zoltan Moricz of CBRE
However, since 2014 net absorption had increased less than employment, as companies started leasing less space per employee. This led to increased demand for higher-quality workplaces, he said.
This was evident in Wellington central, where almost all prime space that entered the market in the past three years had been leased, he said. It was a similar situation in Auckland.
Over the past three years, 19 corporate tenants moved into newly built offices, reducing their workspaces from 80,580 square metres to 72,250sqm.
Dean Croucher, of TwentyTwo, an independent property advisory firm, said the types of businesses using co-working spaces was changing. For the past 10 years, such spaces had been generally used by ‘‘under-capitalised entrepreneurs or not-for-profit initiatives’’, he said.
‘‘As a result, the facilities have sometimes lacked the level of investment needed to compete with a business leasing traditional office space.
‘‘Consequently, the property market has generally viewed these offerings as boutique and suited to small businesses or startups, and not any real threat to the traditional property investment market, developing and leasing commercial office space.’’
That is until now. Last year, when NZX-listed property company Precinct Properties brought 50 per cent of Generator, a business that offers co-working spaces in Auckland, it gave some ‘‘credibility and horsepower’’ to the latest ‘‘real estate revolution’’ in New Zealand, he said.
Croucher believed other big players would follow suit, as the trend of shared spaces continued to grow, he said.