More than half of corporate occupiers across New Zealand and Australia plan to reduce their footprint of traditional leased office space in the next two years, as their portfolios shift towards flexible workspace solutions.
This was a key outtake from CBRE’s Pacific Corporate Coworking Survey: The Future is Flexible report, which surveyed 60 large occupiers across New Zealand and Australia on their current and future planned use of flexible space, with a focus on coworking.
In New Zealand, 23% of office occupiers are currently using flexible workspace solutions as part of their office portfolio, versus 40% in Australia. Highlighting the emerging growth in this market, New Zealand had a greater proportion of occupiers considering flexible solutions for the future than Australia – 39% versus 32%.
In the next two years, 47% of New Zealand occupiers plan to reduce their traditional leased office footprint space and 47% are looking to increase coworking space use, compared to 39% of companies that have no plans to adopt flexible workspace solutions.
CBRE Research, Associate Director, Gergely Gaspardy, said the uptake of flexible space would only accelerate as more corporates capitalised on the opportunity to have greater workplace flexibility.
“Our relationship to work has changed entirely, underpinned by revolutionised working methods via advances in technology. In response to these changes, flexible workspaces are becoming the point of reference for companies reassessing their commercial real estate requirements,” Mr Gaspardy said.
“Flexible space is no longer viewed as being the exclusive domain of entrepreneurial, start-up companies. The survey findings highlight how many corporations are harnessing flexible working to decrease their exposure to long term leases – a trend that is anticipated to accelerate significantly over the coming years.”
Reflecting the growing demand for flexible office solutions, the majority (53%) of office occupiers in New Zealand said they would prefer to be located in a building with a coworking centre. By contrast, only 32% of occupiers in Australia would choose to locate in a building with a coworking operator - highlighting existing concerns occupiers have around building tenant profile, lease covenants and a lack of experience co-locating with coworking operators.
“With coworking less evolved in the New Zealand market, these results indicate that there may be greater interest to collocate with a coworking centre and experience the benefits,” Mr Gaspardy said.
Demand for shared meeting/event space was high, with 81% of New Zealand occupiers expressing they would choose to occupy a building that offered these facilities – an indicator of the importance occupiers place on maximising their commercial real estate objectives.
The survey also revealed that the motivation to use coworking space varied between industries.
Finance & Insurance companies valued portfolio flexibility as a key reason for using coworking but gave access to a collaborative environment a lower score.
Comparatively, Public Sector occupiers placed higher emphasis on the ability to access a collaborative environment and less so on meeting and event space.
Technology companies, which were unsurprisingly found to be the highest users of flexible space, were motivated by the ability to adapt to changes in business processes.
Nicole Fitzgerald, CBRE Pacific Director of Workplace Strategy, said the survey findings highlighted that there was key opportunity in the market for operators and landlords to provide greater diversification in the coworking space offering to meet the different needs and preferences of industry groups.
“Niche flexible workspaces are emerging and continue to experience rapid growth. These specialised offerings range from industry specific spaces and biolabs to workspaces for mothers, and ultimately appeal to groups who aren’t interested in traditional coworking offerings,” Ms Fitzgerald said.
“For landlords, the opportunity exists to adapt their existing office product to meeting the evolving needs of their tenants. Flexible workspaces are becoming the point of reference for companies reassessing their commercial real estate requirements, and landlords need to understand this and adapt accordingly or risk being left behind.”
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.