Flexible workspaces tripled to 3.7m sq ft from 2015

Colliers Research data showed that 83 percent of the flexible workspace stock is in the CBD, 12 percent in the city fringe and five percent in suburban areas.

Witnessing tremendous growth in Singapore, flexible workspace – which comprises coworking centres and serviced offices – now take up 3.7 million sq ft of net lettable area (NLA) of Singapore’s commercial space, revealed Colliers International.

This more than tripled the 1.2 million sq ft in 2015 to become one of the top six occupier sectors. In fact, the sector takes up five percent of central business district (CBD) Grade A space.

Colliers Research data showed that 83 percent of the flexible workspace stock is in the CBD, 12 percent in the city fringe and five percent in suburban areas.

In the CBD, 52 percent of flexible workspaces are located within the Raffles Place/New Downtown micro-market. It is followed by Shenton Way/Tanjong Pagar at 22 percent, City Hall at 16 percent, Orchard Road at seven percent and Beach Road/Bugis at three percent.

The top seven coworking operators holds 65 percent of the market share, with WeWork, IWG and JustGroup controlling 51 percent of the pie. WeWork emerged as the market leader, taking 22 percent share.

“Singapore is considered one of the most mature markets in Asia for flexible workspace. In the last three years, the sector has seen stellar growth, at a compound annual growth rate (CAGR) of 36 percent by NLA,” said Tricia Song, head of research for Singapore at Colliers International.

“We believe it will continue to advance and expand, given the still-low penetration rate of five percent.”

Colliers expects the total space take-up by the sector to increase by 24 percent this year, before slowing to 15 percent in 2020, due to a higher base and tight vacancy.

More operators may also expand into non-office space, following in the footsteps of Justco which moved into Marina Square in the second quarter of 2018 taking up 60,000 sq ft of retail space, it said.

Industry consolidation is also forecasted to continue by way of collaboration between landlords and flexible workspace operators, and/or mergers and acquisitions among operators.

Song noted that the outlook for the sector could change significantly in the event “conventional landlords launch their own coworking products and enter the market in a meaningful way instead of offering long term leases to established operators”.

Source: CommercialGuru, 18 September 2019