Demand for co-working space in APAC set to grow as prime property prices remain at record highs

SINGAPORE, April 12, 2017 – The Asia Pacific region is poised to see a rise in flexible working environments as the demand for co-working space grows at an average of 10-15 percent per annum across all regions, according to a report by Cushman & Wakefield and CoreNet Global.

The report shows that Asia Pacific’s total co-working stock of 10 million square feet (msf) is estimated to be a quarter of that available in the United States and half of that in Europe (40msf and 20msf respectively). Despite the smaller stock volume, corporate real estate (CRE) managers in Asia Pacific are the most likely (70%) to utilize co-working spaces, with the ability to pursue opportunistic growth over the next 12 months listed as the most important motivation for doing so (63%). More than half of the respondents also expected cost savings in prime locations, where co-working spaces are traditionally 10-30% cheaper than traditional office space.

In 2016, co-working operators leased around 5 msf of co-working space in Asia Pacific – a region that remains a top destination for growth outside North America for multi-national companies (MNCs) wanting to build or maintain a presence in gateway cities/regional financial centers.

Chris Browne, Head of Global Occupier Services, Asia Pacific at Cushman & Wakefield said the speed and flexibility offered by co-working spaces allowed businesses to accommodate a more uncertain operating environment and to withstand periods of dynamic change.

“Traditionally businesses were constrained by the time and cost of acquiring and fitting out new premises. The shorter leases and competitive costs of these spaces provide options for businesses wishing to scale up either at speed, on a project basis or for a temporary period.”

Sigrid Zialcita, Managing Director, Asia Pacific Research at Cushman & Wakefield noted that the rising cost of prime property is forcing new ways of thinking about corporate real estate in the region.

“Against a backdrop of economic uncertainty and regulatory change, we are seeing corporate real estate managers become increasingly sensitive to rising costs. The popularity of the co-working concept is being driven by both the desire to contain real estate costs and the benefits offered by flexible work settings. We are seeing a significant trend towards more flexible working spaces and environments as companies and even developers strive to create spaces that are well-designed, attractive to the millennial workforce and close to amenities,” she said.

Among the sectors surveyed, the Technology, Media/Entertainment and Professional Services sectors were the most willing to adopt co-working practices, while the Banking, Financial Services and Insurance (BFSI) sector was the most sensitive to rising real estate costs. Nearly half of the BFSI respondents preferred short term leases (one to three years) because of the uncertain operating environment – a concern also highlighted by the Technology sector. 

More than half of the CRE managers surveyed said they had already begun forming solutions to tackle rising rents and more than half indicated they were interested in incorporating co-working solutions into their overall CRE strategy. Most indicated they will consider adopting flexible workplace strategies to utilize existing space more efficiently; they are also willing to invest in technologies to enable flexible working environments, validating the fact that companies are increasingly supportive of the idea of collaboration, teamwork, agility, networking and openness in the workplace.

The Co-working: Understanding the Ongoing Evolution report is based on a survey by Cushman & Wakefield and CoreNet Global and considers the responses of end-users and service providers, primarily from the Professional Services, Technology, and Banking, Financial Services and Insurance (BFSI) Industries.

Read the report

For further information, please contact:

Sigrid Zialcita
Managing Director, Research, Asia Pacific
+65 6232 0875
sigrid.zialcita@cushwake.com

Amy Kelly
Senior Manager Communications, Asia Pacific

Amy.Kelly@cushwake.com