RECOMMENDATIONS

Integrate flexible workspaces into real estate strategies

Colliers Philippines believes that flexible workspaces can play a pivotal role in various tenants’ real estate strategies.

In our view, occupants should consider implementing a diversified office space portfolio, i.e. while they rationalize traditional office space occupied, they should also look at occupying flexible workspaces especially those near the residential areas of their employees.

Establish microsites in provincial areas and key Metro Manila sites

Colliers encourages landlords to consider developing more flexible workspaces in key sites outside of Metro Manila such as Cebu, Iloilo, Davao, Cagayan de Oro, Pampanga and Dumaguete as these locations have relatively low flexible workspace stock and vacancy compared to Metro Manila.

Landlords with existing flexible workspaces in the capital region should consider Quezon City, Bay Area and Fort Bonifacio for their expansion plans given the queries for flexible workspaces in these submarkets and as firms implement their respective hub-and-spoke models.

Developers to launch their own co-working brands

Prior to COVID-19, developers have been launching their own flexible workspace brands to cater to traditional and outsourcing firms with small and immediate office space requirements.

Ayala Land has Clock In, Robinsons Land has launched Work.Able, while Vista Land has created Global Spaces.

Boutique developers may consider launching their own brands or collaborating with existing and known foreign co-working brands.

The flexible workspace is designed and built by the office landlord, while the operator is in charge of marketing and leasing, with rental income shared between them.

For instance, Common Ground and IWG have formed partnerships with the Eco Group and Damosa Land to establish flexible workspaces in their office buildings. This enables both the landlord and operator to attract large occupiers and ensure profitability and tenure.

Integrating flexible workspaces as part of firms’ BCP

The COVID-19 and the occurrence of natural disasters such as typhoons and earthquakes have accelerated the need for occupiers to revisit their business continuity plans (BCP). Colliers encourages occupiers to integrate flexible or hybrid working into their BCPs. We saw the need for this especially after the damage brought by Typhoon Odette in Cebu and other parts of Visayas region in December 2021.

Flexible workspace in malls and/or near transit-oriented developments

From 2022 to 2024, about 60 percent of the new supply that will likely be completed in Metro Manila are regional to super-regional malls with gross leasable area (GLA) of 50,000 sq metres and above (538,000 sq feet and above).

Colliers encourages flexible workspace operators to consider occupying space especially in transit-oriented mall developments especially now that footfall is reverting to pre-covid levels. Operators may also partner with retail establishments such as gyms, restaurants and cinemas to add value to their services.

Supply and demand to rise

In Metro Manila, most flexible workspaces are located in central business districts (CBDs) such as Fort Bonifacio, Ortigas CBD and Makati CBD due to their accessibility as well as presence of high-quality buildings. As of the end of Q3 2022, Fort Bonifacio recorded the highest number of seats at 15,700 followed by Makati CBD and Ortigas CBD.

In absolute figures, Fort Bonifacio led with a flexible workspace stock of 82,400 sq metres (886,600 sq feet). Colliers has received increasing inquiries for flexible workspaces as firms implement return-to-office due to easing Covid restrictions. Landlords are also exploring the viability of securing flexible workspace providers in their spaces to capture smaller seat requirements from potential occupiers.

Over the next 12 months, we are likely to see the delivery of new flexible workspaces in Ortigas CBD, Makati CBD, Alabang, Bay Area and Quezon City with the opening of Regus, The Executive Centre, Greatwork, KMC Solutions and Work.Able facilities.

There’s no doubt that the popularity of flexible workspaces is rising. These office space solutions will definitely be a crucial part of landlords’ and tenants’ expansion strategies beyond 2023.