Four in five flex office operators in APAC eyeing aggressive expansion  | Real Estate Asia

Four in five flex office operators in APAC eyeing aggressive expansion 

APAC operators also plan to increase rates by 8.3% over the next 12 months.

Nearly three-quarters of flexible office operators globally are looking to expand - primarily in city centres - while more than one-third of landlords want to deliver their own flexible solutions, according to global workspace innovation firm The Instant Group’s  Future of Flex, 2022 Flexible Office Survey.

The Instant Group’s annual flexible workspace survey looks at trends, challenges, and opportunities faced by flexible workspace providers representing more than 3,700 locations. The report delves into changing occupier motivations within the industry, and how both operators and landlords are reacting to these demands. The data was gathered from a survey conducted between July and September 2022 and based on over 250 respondents across the globe. 

Landlords and Operators See Opportunity in Flex

New client demand is fueling planned expansion, with more operators looking to grow into new markets: 39 percent of operators are looking at city centre expansions, while 28 percent are looking to expand into suburban areas. In APAC, 83% of operators are looking to expand, the highest out of any region.

Half of landlords surveyed said they expect 16 percent to 25 percent of their portfolios to be flexible by 2025. Traditional landlords are increasingly considering implementing flexible workspace into their portfolios.

  • 10 percent of landlords are looking to partner up with an existing provider under a landlord brand to help deliver flex space.
  • 18 percent are looking to lease space to a flex workspace provider.
  • 36 are looking to deliver flex workspace solutions.
  • 36 percent are not exploring additional flexible workspace options.

The top motivating factors for landlords to deliver flex:

  • 29 percent of landlords want to generate additional revenue; 
  • 18 percent want to secure tenants at an earlier stage in their growth; 
  • 18 percent want to provide additional services for existing/new tenants; 
  • 18 percent want to build a flexible workspace brand to add overall value; 
  • 12 percent want to understand more about their customers; and 
  • 5 percent have other reasons. 

“Given the demand for and the opportunity to enhance overall returns from flexible workspace, landlords are increasingly considering the role it plays in their portfolio. Landlords are considering joint-ventures and profit-sharing agreements with operators or delivering solutions themselves to capture a greater share of the benefit,” said Craig Hughes, CEO of Partnerships at The Instant Group.

Workspace Rates Ready to Rise

Operators expect flexible workspace costs to increase over the next 12 months to combat energy costs, with 47 percent anticipating a six to 15 percent increase in rates in this time-period. Operators across APAC are planning to increase rates by 8.3% over the next 12 months.

Globally, occupancy rates vary by region. As corporates increasingly move to flex, demand for larger flexible office spaces has risen, resulting in 44 percent of operators globally achieving occupancy rates above 80 percent. 

Offices are Changing

In part due to hybrid working, 96 percent of operators indicate they have seen changes in the way clients use space. The main changes include the increased use of meeting rooms and collaboration spaces; increased usage of private offices; and change in ratio of team size to workspace size.

The office of the future will feature multiple zones for occupiers to utilise the office in ways that align to their specific needs. Offices are also seeing changes in how technology is used, with 27 percent of operators looking to introduce smart tech over the next year.

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