FLEXIBLE AND SHARED

BUILDING on the undeniable growth of the country’s office property segment, local developers are now setting their sights on increasing their co-working space offerings particularly to serve millennial workers and start-up ventures.

Colliers International Philippines, in its recent report “Mining Millennials: Finding Gold in Co-working Spaces,” projected that the supply of flexible workspaces within Metro Manila will significantly increase from the current total stock of 228,000 square meters (sq. m.), with the figure expected to grow by 10% yearly until 2020.

“The outlook for the flexible workspace industry looks positive,” the report read, adding that tapping into the segment will truly bode well for real estate developers as the concept is still in its early stages, and this spells lower business costs for them.

To remain competitive, however, operators of flexible workspaces should look into purchasing office spaces and converting them to co-working spaces or they may consider partnerships with property developers to cushion the effects of 5% to 7% increase in annual rents, Randwil Dinbo Macaranas, Colliers International Philippines senior manager for research, said in the report. “We encourage developers to dedicate co-working spaces in their buildings to take advantage of the segment’s growth,” he added.

According to Colliers, it was in 2011 when co-working space market pioneers started to emerge. More than five years later though, it said there is still no dominant name in the sector. This, it added, thus presents a huge opportunity for industry players to step up.

“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.”

Presently, 5% of the total supply in the office leasing market in the metro is attributed to co-working space segment, with the existing sites covering a maximum of 500 sq. m.

Co-working spaces are the newest types of flexible workspaces, the Colliers report said. The other two classifications are serviced offices, which provide the most fundamental services and are the go-to product among business travelers, expatriates and so-called new entrant-multinational companies; and hosted services providers, which specifically cater to business process outsourcing firms and small traditional companies for their back office and non-core services needs.

“Workspaces in the twenty-first century must meet the employee requirements that include spacious work areas which allow increased productivity, an interesting workplace ambiance which promotes creativity, strategically situated office furniture which foster work efficiency and collaboration — all of which in a location that is not only easily accessible, but also reflective of the company’s brand,” Colliers said. “Thus, it is not surprising to see the increasing popularity of flexible workspaces in recent years.”

Co-working spaces, in particular, have become popular because they allow workers and entrepreneurs to lease the place only when needed at lower costs. They also encourage tenants with similar interests to collaborate in a shared working environment, Colliers said.

“This flexible workspace group also allows members access to the contact details of other members within a community to foster synergies. Occasionally, learning sessions where seasoned industry experts share their expertise are also held to equip individuals with the tools they need for their businesses. As such, common users of co-working spaces are start-ups and freelancers,” it added.

As of end-2016, there were already over 60 flexible office space operators in the country. Multinational corporation Regus pioneered the sector in 1999 when it unveiled its first site with almost 1,000 sq. m. of space at The Enterprise Center.

Contributing 76% to the demand are hosted servicers, while serviced offices account for 19% of the total market size.