Demand seen rising for flexible work spaces

THE PHILIPPINES may witness more developments offering co-working spaces, according to a property consultancy, with supply projected to increase 10% annually over the next three years to cater to millennial workers and startup businesses.

In a report released yesterday, Colliers International Philippines forecast a double-digit increase in the supply of co-working spaces within the National Capital Region from the 228,000 square meters (sq.m.) currently online.

“The outlook for the flexible workspace industry looks positive,” read the report, titled: Mining Millennials: Finding Gold in Co-working Spaces.

The growing popularity of co-working spaces presents the “biggest opportunity” for property developers in the Philippines, according to Colliers, as the concept remains in early stages here and means lower cost for businesses amid a 5-7% increase in annual rents.

“While the pioneers established themselves in 2011, no single player dominates the market until today,” Colliers said.

“The uniqueness of each co-working space allows for others to compete and differentiate each site based on location, design, community and profile of tenants.”

At present, co-working spaces account for five percent of the total supply in the office leasing market in Metro Manila, with the existing sites spanning 500 sq.m. or less.

Co-working spaces, however, have increasingly gained popularity particularly for allowing workers and entrepreneurs to lease the place only when needed at lower costs, according to Colliers.

“Today, major CBDs (central business districts) Makati and Fort Bonifacio rents have reached P1,000 per sq.m. Alternative locations are also catch- ing up in prices. Understandably, the piece-meal characteristic of co-working spaces has been attractive to various tenants,” it said.

As the demand for co-working spaces increases, more property developers have supposedly started looking at the market.

“Serviced offices and hosted services firms have plans of participating in co-working. This is not surprising considering that co-working spaces themselves have offered not just shared offices but private ones as well,” Colliers noted.

“Clearly, it has also become a competitor for the other types of flexible workspaces with overlapping products and services.”

Colliers recommended that developers dedicate a portion of their projects for co-working spaces; consider buying office spaces and converting them to

flexible work spaces; or partner with other office builders under a revenue- sharing or fee- based arrangement.

“The high likelihood that these start-up companies will eventually lease spaces in buildings owned by the same developer when they do grow, is an encouraging incentive for developers,” Colliers said in its report.

The Philippines had more than 60 operators of flexible office spaces at end-2016, with pioneer Regus opening its first site in 1999 with almost 3,000 sq. m. at The Enterprise Center.

Property giant Ayala Land, Inc. recently entered the coworking space through Clock In, a 750,000-sq.m. shared office for start-up companies and freelancers in the Makati Stock Exchange along Ayala Avenue.

“As corporations and startups look for ways and means to drive business growth, two interrelated considerations remain: provide the ideal work environment for employees to work efficiently and productively while avoiding unnecessary costs,” Colliers noted. —