Flexible working is becoming one of the major success stories for the commercial real estate sector, according to the first international comparison of the sector.
The Global Cities Report compiled by The Instant Group reveals that the market has grown a massive 18 per cent in just 12 months.
London has seen massive expansion of new operators and additional centres with 16 per cent growth in 2016, and key expansion occurring in cities like Manchester and Birmingham.
At $897 on average for a desk space in London, the capital boasts the fifth highest workstation rates of all key cities after New York, San Francisco, Chicago and Los Angeles, largely due to increased demand within the city as large-scale projects take off.
A massive 37 per cent of space in New York, Los Angeles, Chicago and San Francisco is now described as co-working – an indicator of how quickly co-working has permeated the flexible workspace market in the US.
Despite the maturity of these key cities, each has grown more than 15 per cent in the past year.
Average workstation rates in the US are more than $900 per person, per month, making it one of the most expensive locations in the world for co-working.
Despite this, US cities are showing an upward trajectory and have grown 12 per cent in the last 12 months.
Research shows that the number of flexible workspace providers across the US totals more than 4000, half of which are concentrated in California, Texas, Florida, New York and Illinois, with California leading the way for the most number of flexible and dedicated co-working spaces.
Major adopters of co-working in these areas include tech, advertising, media and IT firms.
Closer to home, the number of enquiries for flexible workspace in Australia have tripled in just two years, while co-working and flexible office space has grown by up to 36 per cent in five years.
This massive increase in Australian supply exceeds that of the world’s largest market for such space – London – which grew from 9 per cent to 16 per cent in 2016.
It also outstrips growth in New York, which has long been one of the fastest growing flexible work centres in the world.
Sydney saw 19 per cent growth in 2016 with co-working and hybrid space growing three times faster than serviced offices.
An average workstation rate of $565 per person per month ranks Sydney as the 11th most expensive key market in which to rent space, while Melbourne is the 13th at $480 per person, per month.
The flexible workspace market in Hong Kong experienced 16 per cent market growth in the last year and doubled in size in just two.
There are now 202 flexible workspaces in Hong Kong compared to the 330 in New York and 1,136 in London.
Growth is fueled by increased demand for flexible space in a city that boasts some of the most expensive real estate in the world when it comes to the conventional office market.
More businesses are realising the benefits of procuring flexible space to save money.
Average desk rates in Hong Kong are $616 compared to London’s $897, putting it at 10th place among key markets.
Flexible workspace centres have grown by 20 per cent in the last three years in Shanghai, with 62 per cent of all co-working centres located in the central areas of Huangpu, JingAn and Pudong.
The rapid rise in co-working is largely attributed to government support, strong infrastructure and a growing millennial workforce, which has led to an increase in centres and market operators.
It is currently the 12th most expensive place to rent a desk of all key cities.
Twenty-two per cent growth in 2016 has seen Singapore become a strong part of the APAC market evolution.
It is currently the 14th most expensive place to rent desk space of all the key cities.
Over 90 per cent of co-working centres are located in the CBD in Singapore, where at $472 per person, desk spaces are 57% cheaper than in New York.
There has already been a four-times increase in co-working space in the city, but further growth is expected for the second half of 2017 as new operators open locations within Singapore.
The Global Cities Report revealed several unifying themes across all of the global cities which will drive expected trends going forward:
- occupier demand will shape the market more than ever before
- 0perators will be able to observe the customer experience far more quickly, enabling them to adjust offers accordingly
- more hybrid spaces are expected to emerge as more operators recognise the co-working trend
- more landlords will look to the operator model to drive engagement with occupiers.