APAC Flex Market - The fastest growing region in the world - Expanded Edition 2018
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Research Report 2018 APAC Flex Market - The fastest growing region in the world Expanded Edition
Contents Introduction 1 City by City Breakdown 41
The Headline Numbers 3 Bangalore 41
Asia-Pacific Region 5 Bangkok 45
Why Does the Flexible Approach Work? 11 Beijing 49
Flex Appeal 13 Hong Kong 53
The Operator View 15 Jakarta 57
Operator Insight 17 Manila 61
Who is Driving the Growth of Flexible Space? 21 Melbourne 63
Expanding Into the City Markets 23 Mumbai 65
Can These Rates of Growth be Maintained? 25 Seoul 69
Where Next for Regional Growth? 27 Shanghai 71
The Landlord Response 29 Singapore 75
A New Approach 32 Sydney 79
The Market Challenge 33 Tokyo 83
Why Are Clients Flexing? 35
Image p.47 © JustCo
Who is Flexing? 37 Image p.59 © UnionSPACE
Image p.67 © The Executive Centre
Image p.73 © WeWork
What Does the Future Hold for Flex? 39 All other images used under license from Adobe Stock
Introduction 7 OF THE 10
The Asia-Pacific region is host to some of the most expensive markets
LARGEST
FASTEST GROWING
for office space in the world – but co-working and flex workspace
is flourishing in these competitive markets, allowing start-ups and GLOBAL MARKETS
companies new to its cities a path to market. ARE IN ASIA-PACIFIC
Supply of flex space has increased at over 50% in some of the markets
across Asia-Pacific over the past 12 months. This rate of growth has been
driven by a dynamic mix of established, local operators, and international
entrants - now landlords and developers keen to cater for a surge in demand.
Instant has been selling flex space in the region for more than 10 SUPPLY OF FLEX SPACE
years and was one of the first in our sector to do so. This report IS INCREASING AT
OVER 50%
uses our proprietary data to present the first comprehensive
review of the supply and demand dynamics of Asia-Pacific’s flex
workspace market. IN SOME MARKETS
The regional market has grown at a faster rate than any other destination ACROSS ASIA-PACIFIC
across the globe in recent years. An influx of capital, alongside ever-
increasing levels of demand from clients for flexible offices, has enabled rapid
expansion in a short period of time.
There are several factors from a socio-economic point of
view that mean flex workspace is well-suited to the driven,
entrepreneurial business cultures of the region’s powerhouse THE TOP 12
cities. But it is also now increasingly attractive for international APAC LOCATIONS
HOST 30%
firms looking to explore the fantastic opportunities and diverse
urban environments across Asia-Pacific.
This report will explore the drivers behind the growth of flex space, a review OF FLEX WORKSPACE
of supply/demand in the key markets, and our data-led view as to its future
direction.
ACROSS THE REGION
1 2
The Headline Numbers TOP 20 APAC CITIES
The supply of new centres to the region In our view the market is quite substantially larger FORECASTED FORECASTED
CENTRE COUNT GROWTH
increased by 16% over the past year – this than our own records, but the sheer rate of growth CITY CENTRE COUNT GROWTH
2017 2017
means that there are now approximately 8,600 in many of China’s cities, and a market which 2018 2018
centres providing flex office solutions in has incorporated many small, niche, co-working Hong Kong 340 19% 383 13%
the region. environments make it extremely hard to track.
Tokyo 282 14% 299 6%
Growth levels well above 50% have been seen As investments in more traditional real estate Shanghai 275 12% 320 16%
in many localised markets during that time, even elements are providing lower returns across Singapore 265 19% 288 9%
among the larger city markets in the region. APAC, investors are increasingly looking
towards niche, fast-growing areas to maintain Melbourne 228 19% 252 11%
Of the 10 largest global markets for flexible office higher levels of return. Sydney 221 12% 250 13%
space, six fell within Asia-Pacific with a further four
in the top 20 based on our most recent figures. A recent survey of investors found that of these Bangalore 188 20% 243 29%
specialised areas in real estate, 14% plan to invest in Mumbai 158 8% 187 18%
In short, this market is seeing the most flexible office businesses, an indication of the interest
exciting growth of any global region and has within this market at present and a key driver in the Jakarta 146 16% 169 16%
done so consistently over the past five years. flex space revolution across the region. Bangkok 139 10% 155 11%
Kuala Lumpur 122 36% 138 13%
Gurugram 109 34% 128 18%
Brisbane 96 27% 111 16%
Beijing 211 18% 236 12%
THE SUPPLY
OF NEW CENTRES AN ESTIMATED New Delhi 94 8% 113 20%
HAS INCREASED 8,600 CENTRES Seoul 86 9% 90 4%
NOW PROVIDE
BY 16%
Taipei 82 4% 85 4%
Pune 67 21% 80 19%
FLEXIBLE OFFICE Hyderabad 70 21% 87 25%
OVER THE PAST YEAR SPACE ACROSS THE REGION
Chennai 54 31% 69 27%
3 4
18% 9% 14%
Asia-Pacific Region
GROWTH GROWTH GROWTH
BEIJING SEOUL TOKYO
NO. OF CENTRES 141 NO. OF CENTRES 86 NO. OF CENTRES 282
WORKSTATION RATES $847 WORKSTATION RATES $444 WORKSTATION RATES $812
The past 12 months saw mixed results across the key
Asia-Pacific markets within the flexible office industry. 8%
Some of the larger markets continued to experience GROWTH
MUMBAI
steady growth in the low-teens while markets in high 12%
growth cities such as Singapore & Melbourne saw centre NO. OF CENTRES 158 GROWTH
numbers increase by 19%. WORKSTATION RATES $375 SHANGHAI
10% NO. OF CENTRES 302
GROWTH WORKSTATION RATES $635
Of the 2,504 centres identified by Instant BANGKOK
across the top 12 Asia-Pacific flexible cities, NO. OF CENTRES 139
Hong Kong continues to remain at the top WORKSTATION RATES $248 4%
with 340 centres identified. GROWTH
TAIPEI
20% 19% NO. OF CENTRES 82
This is a similar number as can be found in New York and GROWTH GROWTH
WORKSTATION RATES $411
is unsurprising given its maturity and the financial and BANGALORE HONG KONG
service sectors located within the city. NO. OF CENTRES 188 NO. OF CENTRES 340
WORKSTATION RATES $261 WORKSTATION RATES $626
Despite being an established market, the growth levels
in Hong Kong remain some of the highest of our leading 19%
19% GROWTH
cities with an increase of 19% in 2017/18. GROWTH MELBOURNE
SINGAPORE
NO. OF CENTRES 228
NO. OF CENTRES 265
HONG KONG REMAIN WORKSTATION RATES $533
WORKSTATION RATES $506
MARKET 12%
GROWTH
LEADERS
SYDNEY
16% NO. OF CENTRES 221
GROWTH
JAKARTA WORKSTATION RATES $607
WITH AN INCREASE OF NO. OF CENTRES 146
19% IN 2017/18 WORKSTATION RATES $285
2017/18 MARKET FIGURES
5 6
AVERAGE DESK PRICE (USD)
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
USD USD
900 900
847
834
824
811 812
800 800
775
750 749
700 660
651
700
631 635 635
626
610 610 607
589
600 552
569
600
543
529 533
511
506
489 499
500 455
468
500
444
432
426
380
375
400 400
327
310
285 285
300 261
250
261
251
265 266 261
278
266 300
248
200 200
BANGALORE BANGKOK BEIJING HONG KONG JAKARTA MELBOURNE MUMBAI SEOUL SHANGHAI SINGAPORE SYDNEY TOKYO
7 8
NUMBER OF CENTRES 2017/18
: CO-WORKING : HYBRID : SERVICED : OTHER
CENTRES CENTRES
400 400
340
350 350
4 302
282
300 12 265 300
4
228 5
250 221 250
223 12
188 162 7 134
200 130 200
158
139 141 146 91 86
58 8
150 150
6
67 86
66
100 67 72
52 54 90 100
83 91
79 104
49 43
50 43 63 50
48
73 30 73
54
48 34 34 40
29 24
12 20 13
0 0
BANGALORE BANGKOK BEIJING HONG KONG JAKARTA MELBOURNE MUMBAI SEOUL SHANGHAI SINGAPORE SYDNEY TOKYO
9 10
Why Does the Flexible Approach Work?
The rapid growth of Asia-Pacific’s key cities has sizes. Flex workspace allows workers to operate
created issues for those seeking office space from more cost-effective space in locations of
- flexible workspace provides a sustainable their choosing that do not rely upon an arduous,
solution. expensive trip to the central business district.
With rents in conventional space among the This combined with the vibrant start-up culture
highest in the world, constrained supply of new in these markets means that co-working and flex
space coming to market, and transport congestion, workspace provides a robust alternative to office
these are the perfect conditions to drive a more markets that can be prohibitively expensive to all but
agile approach to workspace for companies of all the most well-established corporate firms.
POPULATION GROWTH FORECAST TO EXCEED
OFFICE SPACE IS AT A PREMIUM
5% YEAR ON YEAR
INCREASING FOCUS ON SERVICE SECTOR JOBS
6 OF THE WORLD’S TOP 10 MOST CONGESTED
CITIES ARE IN ASIA
ASIA-PACIFIC START-UPS ARE FINALLY STARTING
TO RAISE SERIOUS INVESTMENT ALLOWING FOR
5 OF THE WORLD’S TOP 10 COUNTRIES FOR EXPANSION - FUNDING IN CHINA AND SOUTHEAST
LONGEST COMMUTE TIMES FALL WITHIN ASIA ASIA REACHED RECORD LEVELS IN 2017
LARGE AND DIVERSE TARGET MARKETS, OFTEN $19.3 BILLION WAS RAISED ACROSS THE REGION
HARD TO ACCESS QUICKLY IF OFFERING A IN THE FIRST HALF OF 2017 ALONE - THAT’S MORE
PHYSICAL PRODUCT THAN WAS RAISED BY FIRMS IN SILICON VALLEY
11 12
Flex Appeal
In Japan senior managers, who are often older, experienced more western culture feel comfortable The introduction of flexible workspace into the where they base themselves, and at a lower cost.
expect private offices as this represents seniority with hot desking type environments. region gives employees more options of working For start-ups or foreign companies entering the city
within a company. In the same sense many junior environment and removes an over-dependence markets of the Asia-Pacific region, this is critical
individuals still feel they must be seen in the In certain Asia-Pacific markets leasing terms are on a single, central corporate HQ. as the high rates for conventional space and low
office at all times to represent dedication even if already short, often between 3-5 years, making availability in the central business districts of those
this limits productivity. the need for large scale flexible space less relevant In turn this injects more agility into workplace markets are very prohibitive.
for larger companies who may still be looking for strategy simply by giving workers more choice as to
In China and Korea individuals still expect to have some security. They are now looking at more flexible
their own desk within an office environment. Only solutions that free up CAPEX, reduce head count
very young companies and individuals who have and the risk of signing a lease.
For businesses entering the region for the first a palpable sense of dynamism across its cities.
time or even those expanding operations into Larger firms are now also looking at more options in
different countries, flex space is becoming a occupying space that do not require signing a lease,
preferred route to market in Asia-Pacific. even for larger headcounts.
Flexible workspace – and its culture of It is changes to real estate strategy such as reduction
collaborative, community-based working – in commuting times that significantly assists staff
Finding a few desks that allow businesses to sample A recent deal with AMEX in Kuala Lumpur with
seems well placed to overcome some of the productivity and also retention of key employees.
the local market via the abundant choice of the local Instant was for a 1,000 headcount office space but
significant issues that are impacting business
SEAN LYNCH flex operators is relatively low cost in some of Asia’s rather than go down the lease route, it made sense
in the region’s major cities.
MANAGING DIRECTOR expensive cities but also low risk. to work with a third party to source and operate the
INSTANT ASIA-PACIFIC workspace on their behalf.
In these markets, the options that flex space provide
But the growth of flex space is not just a story for
have allowed companies to select a number of
foreign companies, the local business community Many international firms are more comfortable with
different locations and provide their employees
has embraced the move to more agile space flex solutions as it reduces the risk of exposure in
with agile solutions nearer their home.
solutions as it encapsulates the entrepreneurial feel foreign markets while also providing a rapid route
of many of the city markets. to growth.
It is an exciting time to be operating in the region SEAN LYNCH
as there has been so much growth and there is MANAGING DIRECTOR
INSTANT ASIA-PACIFIC
13 14
The Operator View
The growth in demand across the region has To facilitate these experiences, operators are Centre numbers are our focus,
encouraged many operators to expand rapidly. using technology more than ever before.
Many businesses expand across Asia-Pacific in
to ensure we have a good variety
part because of its sheer scale and realising how WeWork and others have created dedicated Member of locations, price points and
difficult it can be to service client requirements Apps to both list the companies operating within a sizes. Occupiers are increasingly
from one location. certain space but also to facilitate interaction both
locally and further afield. demanding added value beyond
Flex space provides an excellent option as it allows the space.
client-facing teams to be positioned where they How much value these interactions truly create is
need to be at relatively low cost and with minimal hard to measure, but clearly for some companies We are seeing far more
risk. the opportunity to easily engage with like-minded
people and potentially share knowledge is a feature
interaction between clients,
Supply of flex space has risen in response to the that they value and are willing to pay a premium for. more service exchanges / barter
market demand for project-orientated, location- agreements. As the provider
specific requirements and, as it has done so, clients
have begun to relish their exposure to the added
we are the conduit to marking
benefits of flex space environments. these connections. I think this is
how we stand out as a service
This includes access to wider business
focused business. It is important
communities, exceptional amenities and
proximity to city centre locations.
OPERATORS ARE USING to understand your clients and
TECHNOLOGY areas they might need support.
This expectation of “value-add” amenities and
services to the flex space environment has TO FACILITATE
EXPERIENCE
AND
put pressure on operators across the sector to
significantly improve the customer experience. This LUC DELAUZUN
ENVIRONMENT
ARCC SPACES
includes direct introductions or creating spaces
where individuals can meet and discuss business
development or collaboration in a more relaxed
environment.
15 16Operator Insight:
Corporate Demand Market Consolidation
Flexible workspace is now mainstream. No matter which market you look to Market consolidation is great for Many landlords are looking to joint
Over 40% of our membership work across APAC, there is a clear increase those seeking space. It means larger ventures and profit share models with
for large corporates. We have seen an in demand from large corporates who networks with access to more offices operators who supply design and
increase both in demand for a number appreciate access to flexible terms, in more locations. This also helps with technology for a management fee.
of offices from single corporates around scalable workstation provisioning to economies of scale on supply costs
our network as well as from corporates reflect staffing changes, savings on and allows larger companies to pass on Some widely known examples in the
seeking large enterprise deals in key CAPEX for fit-out and make-good and savings to their members. region include WeWork-Embassy
markets. reduced risk. Group (India), UCommune-CapitaLand
TODD LIIPFERT (Singapore), Ucommune-Vanke (China).
Deals with Fortune 500 companies have ANNA CHAVEZ SENIOR DEVELOPMENT DIRECTOR
driven our recent expansion to new SENIOR MANAGER – CHINA & SINGAPORE THE EXECUTIVE CENTRE ANNA CHAVEZ
centres in Singapore, Hong Kong, Tokyo, SERVCORP SENIOR MANAGER, CHINA & SINGAPORE
SERVCORP
Beijing, Mumbai, and Sri Lanka.
TODD LIIPFERT
SENIOR DEVELOPMENT DIRECTOR
THE EXECUTIVE CENTRE
17 18Operator Insight:
Space as a Service Leasing Large 2019 and Beyond
As corporates come with larger and ‘The services that do seem of value are Having operated in Asia since 1994, we We are now in 30 markets and have
larger requirements, the ability to modify personalisation of space/fit out, premium are able to leverage our accumulated over 125 committed locations. We have
and create the perfect blend of co- end of trip facilities and a range of market data and expertise to identify grown by 30% per annum for the past
working, community spaces, meeting workspace solutions people can rotate opportunities for growth. Fundamental three years and plan to continue to
rooms, and private offices is essential. through to suit their mood and project. to this is speaking with our members to grow within our existing footprint as our
identify where they need space and then members need us.
Our job is to empower our members In addition to this, as more sole traders to secure and create that space in the
to succeed. Creating the perfect office and small business operators enter the market. This means we are targeting to add more
helps us do just that. market and the need for cost-effective than 30 locations to the network in 2019
marketing efforts are ever-increasing, Over the past five years, the amount of across our existing markets and into
TODD LIIPFERT such as peer to peer marketing, word space we target in new locations has new locations.
SENIOR DEVELOPMENT DIRECTOR of mouth etc., there is an even bigger increased from approximately 1,100 sq m
THE EXECUTIVE CENTRE
emphasis on community platforms and to 1,800 sq m per centre. TODD LIIPFERT
network marketing.’ SENIOR DEVELOPMENT DIRECTOR
THE EXECUTIVE CENTRE
TODD LIIPFERT
ANNA CHAVEZ SENIOR DEVELOPMENT DIRECTOR
SENIOR MANAGER, CHINA & SINGAPORE THE EXECUTIVE CENTRE
SERVCORP
19 20Who is Driving the Growth PERCENTAGE SPLIT OF LARGE OPERATORS VERSUS INDEPENDENTS
of Flexible Space?
LARGE OPERATORS INDEPENDENTS TOTAL
The flexible industry in Asia-Pacific remains heavily weighted towards APAC 31% 69% 2,199
independent and localised providers, however the last 12 months saw Hong Kong 25% 75% 157
some larger operators either expand quickly within the region or make
bold statements about future expansion plans. Melbourne 11% 89% 148
This positive sentiment has been supported by an increasing number of Sydney 13% 87% 121
corporate customers, who have experienced the advantages of flexible
space and have moved often quite large teams into either dedicated areas Singapore 20% 80% 115
or shared space across the region.
Bangkok 11% 89% 88
Spaces (part of global flex operator IWG) which counts Alibaba, Bangalore 27% 73% 82
Booking.com, Uber and Paypal among its customers has indicated
Tokyo 38% 62% 77
plans to increase its 80 global centres to 250 during the next year.
Mumbai 20% 80% 75
A number of new locations have opened across Southeast Asia as countries
Jakarta 27% 73% 73
such as Malaysia, Indonesia, the Philippines and Vietnam all experienced an
increase in demand. Shanghai 42% 58% 69
In addition to this, WeWork has expanded quickly within the region during Taipei 23% 77% 43
2017 and has indicated that its growth is not likely to slow during 2018 as
companies like Microsoft and Facebook have taken large numbers of desks Seoul 26% 74% 35
within its centres across the region.
Beijing 46% 54% 28
21 22Expanding Into the THE ASIA
PACIFIC MARKET
City Markets SAW SUPPLY INCREASE BY
16%
IN 2017/18
The rapid ascent of flex workspace has been driven by the largest
cities in the region. Two of Australia’s largest cities, two from India,
and rapid expansion in the Chinese markets of Hong Kong, Beijing and
Shanghai mean that 7 of the 10 largest fastest growing global markets
are based in Asia-Pacific.
And, in fact, Jakarta, Tokyo, Seoul, Bangkok and Singapore are not
far behind. These top 12 APAC locations host 30% of the region’s flex
workspace, a higher mix than the equivalent markets in the US or Europe.
POPULATION GROWTH
The profile of the flex space industry has changed dramatically over
the last 5 years. In 2012, more than 50% of locations now found
within these major cities did not exist.
The size of the shift away from these locations gives us an impression of
IS FORECAST
TO EXCEED 5%
YEAR ON YEAR
how quickly the industry is spreading across the region as supply of space
has been boosted by both local entrepreneurs and multinational companies.
But the fact that so much of the market is derived from these key cities
leads us to conclude that in the coming five years we should anticipate
significant growth in secondary cities across the region. THERE ARE
AN ESTIMATED
PROVIDING FLEXIBLE SPACE
23 24Can These Rates of
Growth be Maintained?
The growth rates for supply of flex space across
Growth in supply to the top APAC locations has been
around 15%+ over the past year, while markets in high Asia-Pacific are among the highest in the world, and
growth cities such as Bangalore saw centre numbers have been so for the past five years – for investors,
increase by more than 20% over the same period. it provides some of the most enticing opportunities
From our data, we are seeing enough occupier demand, to take advantage of the move towards flexible
thus far, to more than match this additional supply of workspace solutions.
space, despite the rapid rate of growth.
What we are seeing however, is that the lack of space
2017/18 saw the number of individuals placed coming to market in the central business districts of
into flexible locations increase by over 40%
compared to the previous year.
those key cities is now beginning to hamper the growth
of market supply of flex space, as there simply isn’t the
This increased demand is coming from a wide variety space available for flex operators to cater for demand.
of businesses, from small enterprises to large corporate
organisations – reinforcing the importance of flex to all
KIERAN GARTSHORE
companies.
DIRECTOR
THE INSTANT GROUP
25 26Where Next for Regional Growth? OVER THE PAST 12 MONTHS
HO CHI MINH
HAS SEEN SUPPLY GROW
30%
Our prediction is that flex space will develop in more competition from landlords marketing leased
new, high growth markets as it seeks to expand space and flex providers will have to work hard to BY OVER
beyond the region’s key financial hubs. attract companies used to procuring space in a
conventional manner.
Ho Chi Minh in particular has come into focus
over the last 6 months with more than 50 flexible However, the number of entrepreneurs based
workspace locations springing up within the city and in these secondary cities is growing. In India
supply growing by more than 30% over the past 12 Prime Minster Modi indicated that 44% of
months. start-ups are already in Tier 2 and Tier 3
Conventional office rents in the city are
cities*, and, in our experience, this invariably
creates demand for flexible and communal WITHIN ASIA
expected to rise by over 6% in 2018 as space, in turn helping to change market THE AVERAGE PROFIT
demand outstrips supply of space and, as we
have seen elsewhere in the region, flexible
perception in favour of flexible workspace FOR A FLEXIBLE OFFICE
providers will try to keep up with demand
operators.
LOCATION WAS
from companies of all sizes that are looking
for other options aside from taking a lease.
For example, India already has several large city
markets for flexible working but the government
8.8%
has reduced restrictions on companies being
The expansion of leading operators into Tier 2 cities foreign-owned and there has been an increase
in the region will become a dominant theme for in outside investment and a growing number of
the next five years - in many Asia-Pacific markets professional service sector organisations setting
these secondary cities are still dominated by up there, presenting a prime opportunity for flexible
WEWORK
manufacturing or industrial hubs within fast-growth workspace providers.
IN SINGAPORE
service sectors, which are dominated by domestic
companies.
HAS OPENED
However, vacancy rates are far higher, and
conventional real estate pricing far lower in these * https://inc42.com/buzz/startup-india-now-44-of-all-startups-
EIGHT NEW CENTRES
locations meaning flexible providers face much are-found-in-tier-ii-and-tier-iii-cities-says-pm-modi/ IN JUST 9 MONTHS
27 28The Landlord Response
In other global markets, landlords have been been slower to adapt, due to tight market conditions Centre numbers is our focus, to ensure we
slow to recognise the threat posed by flex but ‘Swire’ has adopted this model and is the first
workspace and how best to cater to this landlord on the island to lease space to WeWork.
have a good variety of locations, price points
demand. The buzz generated in the region has and sizes. Occupiers are increasingly demanding
seen APAC’s landlords react the fastest. In Australia, we have seen landlords such as GPT added value beyond the space. We are seeing
and Dexus open their own flex space with Space
In a market such as Singapore, where WeWork and Co and Suite X respectively. In Singapore, far more interaction between clients, more
opened eight new centres in just nine months Lendlease’s new Paya Lebar Quarter will devote service exchanges / barter agreements.
and provided rates for corporates and enterprise more than 15% of its total workspace to co-working.
clients (for 50 to 150 PAX) that were at a significant As the provider we are the conduit to making
discount to conventional workspace, landlords have Tokyo also has unique market conditions, where
had to sit up and take notice. landlords typically provide an end-to-end solution
these connections. I think this is how we stand
for corporate occupiers taking traditional leased out as a service focused business. It is important
CapitaLand seems to be embracing the space. to understand your clients and areas they might
concept aggressively - it saw what was
happening in the global market and partnered Servcorp was one of the first operators to need support.
with Singapore-based operator ‘Collective recognise a gap in the Japanese market in
Works’ in 2016, followed in 2017 with the terms of offering serviced office space and is LUC DELAUZUN
launch of a number of schemes under the one of the largest providers. ARCC SPACES
‘Collective Works’ brand name.
IWG and WeWork are expanding fast and Japanese
This is a great example of a progressive landlord corporations are also offering space, with Matsui the
that has embraced the rise of flex and recognised latest to offer collaborative spaces.
that they can be part of the opportunity to increase
rental yield and building valuations across their
portfolio. In Hong Kong, landlords appear to have
29 30A New Approach to Sourcing and
Occupying Workspace
This is a strategy that worked for The Instant Group has delivered two innovative The move has seen both AMEX and Datacom
workspaces in Kuala Lumpur in the last few take a “managed office”, whereby Instant
both the landlord and our clients, months for AMEX and IT services company leases and runs the space on behalf of the
giving both an innovative turnkey Datacom. client under a tripartite agreement between
and totally bespoke workspace, The Instant Group has delivered an
the landlord, occupier and Instant.
delivered on time and on budget, innovative 90,000 sq ft workspace in the Instant has been delivering similar flexible office
with costs rentalised over the ‘Menara Prestige’ building, opposite the solutions for clients in Europe and the US for more
famous Petronas Towers for more than than 10 years - delivering over 4 million sq ft of
term of the lease. space in the UK, US and EMEA - but these are the
1,100 American Express employees.
first projects of their kind in Asia-Pacific.
I anticipate that more corporate In July 2018, Instant completed the APAC regional
occupiers will look to solutions HQ for Datacom, a global IT company with offices
across Australia, New Zealand, Asia, Europe and the
such as this in the Asia-Pacific
Americas, in the ‘Sentral District’ of Kuala Lumpur.
market in the coming years;
they are perfect for firms that
are looking to occupy bespoke
space quickly and efficiently. THE INSTANT GROUP AMEX AND DATACOM
HAS DELIVERED OPERATE FROM A
SEAN LYNCH MANAGED OFFICE
MANAGING DIRECTOR
INSTANT ASIA-PACIFIC SQ FT WORKSPACE WHICH INSTANT
OPPOSITE THE FAMOUS LEASES AND RUNS
PETRONAS TOWERS
31 32The Market Challenge
The regional market is still relatively immature directly to the young age of many locations within
compared to its global counterparts and it is the region who are still working at building their
proving tough at times for both established and customer base and reducing vacancy rates.
new operators. Recent research by DeskMag
For an area where the average age of a centre
highlighted that less than 50% of centres Flex workspace has been long seen as the short- is still under two years it shows that it takes
operating in Asia were profitable at the time term equivalent of conventional space, but for many time to build up a steady lead flow and reach
of research, though this figure has increased clients it is now an alternative means of finding and
since last year. running office space, with a lower risk profile and a consistent level of capacity despite growing
more transparent pricing than the lease market. demand. Companies must be committed to the
This is likely both due to the level of competition
As the UK and US markets have matured,
industry and developing their customer base
within the area but also the number of centres that
are less than 2 years old and therefore have high we have seen customer occupancy rates rather than hoping for quick wins.
levels of debt. The same report indicated that of increasing over time, and we would anticipate
those that are profitable, the profit margins were the same in Asia-Pacific. As we note in other markets around the globe,
thin. more established operators bring to bear their
In fact, as competition with the broader commercial
Within Asia the average profit after tax for property market increases in the coming years, knowledge of lead generation, audience insight
a flexible office location was just 8.8%. The we would anticipate that this investment in the and how to develop their brands accordingly.
same research indicated that while Asia operator brands and nurturing of clients will evolve The most successful companies across the flex
has the highest percentage of unprofitable aggressively thereby producing some interesting
centres it also has the highest percentage market innovation and bringing a distinct local space market spend time and money developing
of profitable centres compared to other flavour to the workspace options available. their client base, working on retention and
global regions. building their reputation.
It will be fascinating to see how conventional
In Europe and South America over 35% of centres landlords react to local market conditions and the
indicated that they break even at present while in fierce competition as the market heats up. SEAN LYNCH
Asia this figure is far lower at just 25%. This relates MANAGING DIRECTOR
INSTANT ASIA-PACIFIC
33 34Why are
Clients Flexing?
The rationale for using flexible offices is
also changing with potential occupiers TERMS BELOW 12 MONTHS AND ABOVE 18 MONTHS
accepting that flexible office space can be
a long-term solution to some of their wider
: UNDER 12 MONTHS : 12-18 MONTHS : OVER 18 MONTHS
business challenges.
Enquiries for terms over a year and also 50%
for those looking at between 1 and 3
years are increasing both in real terms
2017 40%
10%
and also in proportion to other term
periods. While the shortest terms, those
less than 3 months, are in decline. 46%
2016 51%
If this trend continues it could be an indication 3%
that companies are viewing the flexible office
space sector as a long-term solution to not
only allow for flexibility but also to drive 0% 25% 50%
profitability and support cultural changes
within their businesses.
35 36Who is Flexing?
The profile of companies using flexible Sole traders and small companies (head GOOGLE SEARCHES FOR FLEXIBLE OFFICE TERMINOLOGY*
space is also changing. Start-ups have count less than 100) have traditionally made
been commonly associated with the move up a large proportion of the industry but
towards the adoption of more flexible already we are seeing large companies (head : AUSTRALIA : HONG KONG : SINGAPORE
workspace but of equal importance is count above 1000) making more inroads over
the expansion into new markets and the last year, a trend that is likely to continue. 8000
accommodating project-based teams.
UNIQUE SEARCHES
Looking at Google Trends there is 6000
‘Scale-ups’ are another type of organisation
who have been adopting flex space, allowing clearly a growing interest in flexible
greater agility, lower risk, and more flexibility and co-working office space across 4000
to add additional desks when required. Australia, Singapore and Hong Kong.
Searches for “co-working” have
From a sector perspective, enquiries come doubled during the year with a gradual 2000
from Financial, Technology, Consulting and upwards trend month on month.
Professional service companies in equal 0
measure with their sizes and requirements 2014 2015 2016 2017 2018
also highly varied.
37 *Search terms include Flexible Office, Co-Working Space, Co-Working, Shared Office Space, Shared Office, Serviced Office 38What Does the Future Hold for Flex? CONVENTIONAL OFFICE RENT GROWTH FORECAST 2017 - 2019
The forecast for Asia-Pacific’s flex market But it will also have a negative impact as it will 25
% INCREASE
looks positive with pricing and enquiry numbers inhibit the supply of new flex centres as the costs of
increasing and it does not appear that over- occupancy increase for operators and their margins
20
supply has outpaced customer demand. in prestigious locations are impacted.
Companies like WeWork are expected to double This is already the case in the Sydney CBD. 15
their presence across the region within the next 18 For example, where vacancy rates are at all
months (though its acquisition of Naked Hub may time lows and supply of space so constrained
result in a change in strategy). 10
that there is simply not enough availability
to meet demand, particularly from corporate
The Executive Centre is also expected to clients with larger space requirements. 5
expand by up to 40% year on year during
2018; and Chinese-owned companies are also 0
looking to gain market share with expansion
outside of China.
-5
The projected increase in conventional office WEWORK IS EXPECTED
TO DOUBLE
rents across Asia-Pacific’s key cities (as seen in the -10
graph overleaf) will create an interesting challenge
for flexible spaces.
ITS PRESENCE -15
As with many other cities in the world, it will lead to
even more customers turning to flex solutions to try
ACROSS ASIA-PACIFIC SINGAPORE SHENZHEN HO CHI
MINH
SYDNEY HONG KONG
CENTRAL
BEIJING SHANGHAI SEOUL HONG KONG
OVERALL
TOKYO
and mitigate the effects of rapidly rising lease costs
WITHIN THE NEXT
particularly in the short-term. 18 MONTHS
SOURCE:
https://www.bloomberg.com/news/articles/2018-01-21/singapore-office-rents-seen-rising-twice-as-fast-as-hong-kong
39 40Bangalore AVERAGE DESK PRICE
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
Bangalore proved to be one of the strongest Another trait of this young and fast-growing
cities within the flexible industry during 2017. market is that we don’t see the dominance from
Demand has been coming from a number more established operators such as Regus and 300
of large organisations focused around the Servcorp within the city. IN 2017/18
50%
261 261
successful Technology and Banking sectors, 251
250
supported by wider growth in the city. While Regus do operate 6% of centres and USD
have the largest presence by number of
The city saw some of the strongest growth figures
locations, there is an even distribution of new OF ENQUIRIES FOR SPACE
CAME FROM
25+
during the past 12 months with an uplift of 20% in
operators hosting between 4 and 7 locations
the number of centres now open.
within the city. 200 TEAMS OF
This growth comes off the back of 3 years These operators have the backing of investment
of strong double-digit growth and with large funds and are able to quickly expand into new
multinationals securing entire floors with flex locations as demand increases and we expect to
providers during 2017-18. see further activity during 2018 from many of them
in Bangalore.
The take up figures indicate a doubling of flexible
office space over the last two years in the city. Many One somewhat unique aspect to the Bangalore
centres across Bangalore are less than two years flexible market is the high level of corporate
old, it is therefore not surprising that we see nearly and large companies taking on flexible space.
50% of the centres offering hybrid solutions. The In the last 12 months, 50% of enquiries for space
operators have responded to the demand from within Bangalore came from teams of 25 or larger
larger organisations looking to adopt flexible space with the average number of workstations being 69
within the city both as a short-term solutions but across the year. In response to this higher-scale BANGALORE
also as part of their longer-term strategy. demand, operators are taking on ever larger floor
plates, of 100,000 sq ft or more. NO. OF CENTRES 188
WORKSTATION RATES $261
41 4236% OF OCCUPIERS Bangalore
HAVE SIGNED TERMS
FOR AT LEAST
2 YEARS
WITHIN FLEXIBLE SPACE Similar to other markets we see increasing Short term leases of less than 3
term-length as companies want longer- months are equally popular within the
term security but also aim to achieve more city with a growing number of start-
attractive rates through economies of scale. ups and individuals looking for highly
flexible terms.
TERMS OF
Bangalore sees the highest percentage
of term over 24 months with our data The pipeline over the next 3 years is strong in
showing 36% of occupiers in the city Bangalore with a large volume of new office
3 MONTHS have signed terms for at least 2 years space expected to come onto the market.
OR LESS
within flexible space. While the majority of this will be traditional
space, we expect to see some of the larger
international flex operators take on significant
The flexible market appears to be fairly
ARE SHOWING GROWTH polarised within the city with our data showing
amounts of new space to help secure their
position within the city.
that growth is happening at both ends of the
market but very little activity in the middle.
This will likely mean pricing will remain stable
with the possibility of increased short-term
competition putting pressure on average rates.
50% OF
ENQUIRIES
CAME FROM TEAMS OF
25 OR LARGER
43 44Bangkok AVERAGE DESK PRICE
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
Bangkok has traditionally suffered from a limited While larger players such as Servcorp and IW Office
supply of Grade A office space within central have a presence within the city it appears unlikely
80%
locations, a factor that flexible office providers that we will see the large-scale development and 300 285
OVER
have been quick to capitalise on. While the consolidation from multinational operators within 265 266
market is not the largest in Asia Pacific, there Bangkok in the short term, which is expected in
248
are nearly 140 centres spread across the city. some of the other cities across Asia-Pac.
USD OF LOCATIONS
Growing rental costs and limited premium locations Demand and pricing figures indicate a more ARE RUN BY LOCAL
have meant that some companies are in limbo as competitive flexible market in Bangkok INDEPENDENT
they wait for new space to be built and have been
attracted to flexible locations.
through 2017/18 than previously seen.
200 PROVIDERS
Despite relatively high occupancy rates within the
Over 40% of available office space is located within traditional sector, many landlords have been offering
the CBD, and organisations looking to achieve lower highly attractive rates to maintain current occupiers
rates and are willing to compromise on location and attract new clients.
have been able to take advantage of the slow
proliferation of flexible space within Bangkok’s
outer districts.
As we see across many Asia Pacific cities,
Regus hold the largest presence within the
city with 20 centres.
Unlike many other markets within the region other
large operators have a limited presence within the BANGKOK
city with over 80% of locations run by independent
NO. OF CENTRES 139
and mostly local providers.
WORKSTATION RATES $248
45 46There was only a double-digit increase in Thailand is one of the key business
demand for 0-2 workstations. This segment hubs in the region and its favourable
of the industry saw demand increase by 15% geographical location coupled with
throughout 2017/18 and was offset by falling infrastructure readiness makes the
demand for large scale flexible space throughout country a key market for JustCo.
the year.
Co-working space goes beyond the
Alongside this, after a number of years of very high
centre growth and with limited Enterprise adoption physical environment and facilities as
within the city, reports indicate that many centres it has become a symbol of community,
have occupancy figures lower than they would wish, connectivity, efficiency, and
particularly those operating co-working space. networking. We are here to create a
powerful ecosystem where individuals
In line with these reports we have seen rates
and businesses of all sizes can
for flexible space in Bangkok drop over the
last two years with the average workstation
harness the benefits of the network
rate in 2017 falling by 6% to $248. effect through meaningful interactions,
participation and partnerships.
Many operators are looking to generate profits
from providing additional services such as start-up MR. KONG WAN SING
funding and are not able to rely on providing space
alone to secure long-term profitability at present. FOUNDER AND CEO
JUSTCO
JUSTCO AT AIA SATHORN TOWER
BANGKOK, THAILAND
47 48AVERAGE DESK PRICE
Beijing
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
Despite rumours of increased government domestic providers such as URWork, People
regulation around co-working spaces within Squared and SOHO 3Q who are seeing the largest
FLEX
900 China and specifically Beijing, the supply of expansion during 2017/18. Alongside WeWork who
847
space in the city did not slow in the last year. are expanding quickly within the city to make their
824
presence felt.
SPACE MAKES UP
811
The number of centres tracked by Instant increased
2%-3%
USD by 18% during the year with hybrid spaces seeing Following on from URWork’s strong expansion in the
750
the largest uplift. city during 2017 it moved into the leading position
OF OFFICE SPACE with over 50 locations spread across its partner
network within Beijing.
700 IN LARGE CHINESE CITIES At present 45% of flexible spaces within the
city offer a hybrid environment with the figure
expected to increase. Due to the strong financial backing of local
providers and their expansion within the
countries capital, Beijing has seen far more
Despite the high growth of the number of flexible consolidation than other Asia Pacific markets.
locations in Beijing, the industry is still small in
comparison to the scale of traditional space. Our Over 60% of locations tracked by Instant are run by
data indicates that less than 3% of the total office the top 5 largest providers at present and this trend
stock within Beijing is flexible despite increasing is unlikely to change as both WeWork and URWork
centre sizes and some aggressive development by look set to expand further across Beijing.
local operators.
While Regus previously held the largest number
of centres in the Chinese capital, it is the large
BEIJING
NO. OF CENTRES 141
WORKSTATION RATES $847
49 50Beijing
As occupancy rates across the traditional city. The larger providers are expected to continue FLEXIBLE SPACE WITHIN BEIJING
sector remain high and space for small to obtain bigger spaces with the aim of attracting
companies in the many growing businesses larger customers on flexible terms and drive further
districts is limited, the pressure on flexible value.
locations continues to grow.
Increasingly Hotels are incorporating flex space with
In response to this, pricing for flex space has Jen Beijing (the owner of the Shangri-Lar chain)
gradually increased in Beijing with 2017 seeing providing a floor for co-working within its most
average rates increase by 4% to nearly $850. recent Beijing hotel. URWork signed an alliance with
HomeInns (the largest hotel chain in China) to form
The rates are now some of the highest in Asia the largest network of bookable spaces within a
Pacific and correspond with both the demand single market.
but also the traditional leasing rates found
across key city areas.
Large amounts of new office stock are expected
While not all its 3,400 locations are accessible
to members (just 50 at launch) this is surely
the goal for both companies.
45% HYBRID
to become available in late 2018 and with slowing
international demand there is likely to be a period Hotels are often in prime locations, have large
of adjustment. This is will likely drive rates in the amounts of often unused space and are keen to get
traditional sector down which may well impact the more potential customers into their buildings.
flexible industry.
AVERAGE DESK RATES
Demand is likely to continue to grow with further
small company activity driving growth across the
INCREASED
IN 2017
BY 4%
TO NEARLY $850
51 52Hong Kong AVERAGE DESK PRICE
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
Reports on the flexible market within Hong Kong While these locations had been available previously,
appeared mixed during the past 12 months. supply had always been limited with larger
12+
With 340 centres tracked across the city and an businesses finding it challenging to take space 700
increase in centre numbers of 19%, supply is in hybrid and co-working environments within
660
certainly strong. Certain analysts are suggesting Hong Kong.
MONTH TERMS
651
that there is now an oversupply of space within
62%
While Hong Kong has some of the highest traditional USD
the city and it will take a few years before 631
demand catches up and large corporates take on real estate costs globally, the flexible industry offers
626
MAKE UP
more of the flexible space. surprisingly good value in comparison, and is one of
Certainly, our own data does not support this theory
the reasons why it has seen such strong growth over
the last decade. 600 DEMAND
with an uplift in demand of 20% being seen during
the course of the year. While average rates have 2017 saw average rates for flexible
fallen, this is in part down to the increasing number space fall slightly to an average of
of centres opening in lower value locations and off $626 per workstation, per month.
Hong Kong Island.
These low rates are surprising to those used to
Another driver of falling average rates is the the traditional Hong Kong rates where the focus
increasing number of high volume activity seen is on buildings within the CBD on Hong Kong
within the city during the last year. Island. While flexible centres exist in these premium
buildings we also see a wide spread across the
Our data indicated that demand for 10 or city with locations often found off the island.
more workstations doubled during the year as Recent government activity has supported this with
larger teams were able to take on more space schemes to provide heavily discounted co-working
as the footprints of new flexible locations space and studios in industrial and commercial HONG KONG
increased in size. buildings beyond the centre of the city to provide NO. OF CENTRES 340
more affordable options for young companies.
WORKSTATION RATES $626
53 54CO-WORKING COST SAVINGS BASED ON A HONG KONG EXAMPLE
Hong Kong
: ANNUAL DESK COST : RENT Prior to the introduction of flexible space, Hong term make strong gains in the past 12 months. This
Kong was home to very few start-ups with large segment of the industry often made up of small
: SET-UP COSTS : OTHER COSTS
corporations pricing them out of the market. This companies or freelance workers covers only 5% of
[FIT-OUT, LEGAL] [ADMIN, OCCUPANCY, EXPENSES]
support from the local government is expected demand in 2016 but increased to 19% during 2017.
USD to provide 90,000 sq ft of space at half the
standard rate to help encourage further start-up While it is too early to say if this trend will continue,
$20,000
growth. it certainly could be a telling indication that the local
governments strategy is starting to take effect and
Somewhat surprisingly the area with the highest we are seeing more of an entrepreneurial presence
SAVING
flexible rates in Hong Kong is Causeway Bay, within the city.
25%
an area more commonly associated with retail
and leisure activities. While it is not classed as a
CBD, due to its heavy foot traffic its retail space Colliers conducted a recent study in Hong
commands the 2nd highest rates globally, meaning Kong which showed that flexible workspace
$10,000 that the small number of flexible offices opening in could save a company 25% over the course
the area have huge amounts of competition from of the year compared to a traditional office.
occupiers with very different cost structures.
Based on our figures and taking an average
As the profile of companies within Hong Kong of space across all districts (not just the CBD)
slowly changes so do the demands on office this saving is much higher with flexible rates
space; due to the nature of the flexible office coming in at 45% of the traditional rates
industry we are often the first to see such indicated.
changes.
FLEXIBLE TRADITIONAL
Hong Kong was one of the few markets that saw a
WORKSPACE OFFICE
drop in average lease terms during 2017/18 within
flexible space. While 12+ months terms still make up
Source: Colliers 62% of the demand, we have seen the 1-3 month
Note: Based on 120 sq ft per person, three year traditional office lease, HK$60 per sq ft per
month (US$93 per sq ft per annum).
55 56Jakarta AVERAGE DESK PRICE
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
Jakarta continues to be a popular destination for locations spread across the city. This change is
flexible working with both supply and demand being led by the growing tech and service sectors
expanding in line with global averages. The within the city which are demanding a very different 300 278
285
supply of space tracked by Instant during the type of space. 266 INDEPENDENT
past 12 months increased by 16% thanks to
261
LOCATIONS
5%
several independent operators who have opened This trend is causing the long tail of operators to
SAW AN
12 MONTHS
grow even longer with a 5% swing in favour of USD
in the city. INCREASE
independent locations during the past year. OF
While we have seen larger traditionally serviced
office providers such as Voffice continue to expand The growth of these co-working spaces has DURING THE PAST
their network as demand from larger corporate dampened average rate increases across the 200
clients grew strongly. The serviced office sector flexible area of the industry which has seen
within Jakarta remains attractive compared to some year on year rate growth of 3%.
other Asia Pacific markets with just over 50% of
office locations focused around serviced and virtual The increases being seen are not evident across the
offices. traditional sector with average office rates falling
between -5% and -10% across the city during the
year.
The 3 largest providers in the city all focus on
flexible serviced locations with Virtual Office
options available and represent 25% of all
inventory across the city.
The larger providers in the city are still expanding
but 2017 saw a continuation of the trend first truly JAKARTA
seen in 2016 with far more independent, co-working
NO. OF CENTRES 146
WORKSTATION RATES $285
57 58With a wide range of rates available across the city starting from $100 a month in co- working and ranging to nearly $1,000 a month for a private office within a landmark building, Jakarta’s flexible industry is increasingly catering to smaller tech start-ups with limited capital alongside multinational and financial institutions. At present the average rate for a flexible workstation within the city proves one of the lowest within Asia Pacific at $285 a month. This low cost is encouraging companies to set up their locations within the city to help their expansion into Asia instead of more traditional hubs such as Singapore or Hong Kong. UNIONSPACE PIK AVENUE JAKARTA, INDONESIA 59 60
Manila AVERAGE DESK PRICE
: 2016 : 2017 : 2018 (FORECASTED)
290
55%
Manila has a thriving population of small Thanks to the recent high growth of the flexible 300 279
274
businesses and the local office market remains industry within the city the majority of space (55%)
one of the strongest in Asia from a growth point in the city comes in a hybrid format, catering to the
of view. At present demand is continuing to rise overall higher requirement demand while allowing for
OF CENTRES ARE
USD
with vacancy levels reported to be below 5%. A interactive and social environments.
HYBRID
growing business process outsourcing industry
alongside a growing tech sector has created high Due to low vacancy rates, strong demand
demand for quality office space within the city. and growing technology sectors in Manila 200
rates for flexible space have increased
While new supply continues to grow year on year it substantially over the last 12 months. This
appears that at least in the short term demand will has been seen despite a 16% uplift in
easily meet the new stock coming to the market. In flexible office supply in the city.
response we expect to see far more activity from the
flexible industry as it fills the short term gap but also
This increase in achieved rate despite growing
fulfils the demands of the changing work force in the
supply is indicative of a market which is yet to see
city.
large movement from international providers but a
Our data shows the growth in demand for flexible gradually increasing quality of flexible space across
space within the city, with far larger requirements the city, as the market begins to mature.
seen on average over the past 12 months. This is
similar to other cities which have seen an uplift in
BPO companies, with 60% of flex demand in Manila
at present coming from teams of 10 or more.
MANILA
NO. OF CENTRES 36
WORKSTATION RATES $239
61 62AVERAGE DESK PRICE
Melbourne
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
The flexible workspace industry within local providers catering to a certain demographic or
506
511 Melbourne remains the largest within Australia industry segment prevalent within a specific area.
with 228 flexible locations tracked at the end
77%
489
500 of 2017. It is also one of the most mature with From a supply point of view, despite the strong
an increasing number of centres found in growth of flexible workspaces, traditional office
traditionally residential neighbourhoods across supply is at some of the lowest levels for the last
455
the city. In part due to the adaptable nature of decade.
many Melbourne companies and the importance
OF CENTRES ARE
USD
of work life balance that is found across the city By 2020 there is expected to be a large
it is unsurprising that alongside Sydney we see volume of new space becoming available but
INDEPENDENT the largest number of pure co-working spaces for the next two years and at present space is
400 IN THE CITY CENTRE found across APAC. very limited, particularly within the CBD.
Overall centre growth reached 19% during the last This has meant that we are seeing increased
12 months with the number of locations increasing pressure from companies struggling to expand into
by 37 during the year. new Grade A space but also those looking ahead
to future developments demanding short-term
Taking into account the recent growth in open solutions.
and shared workspaces, now over 55% of
locations within Melbourne offer some form This activity has caused the average prime rents
of co-working and is expected to reach over in the traditional sector to grow by 8% during
65% by the end of 2018. 2017 - a figure that is also reflected in the flexible
industry rates. Strong supply growth has increased
Looking at the type of operators within the city competition within the city but despite this the
we see Regus leading in terms of locations with a strengthening commercial real-estate market as a
number of smaller operators offering multiple offices whole has helped average flexible rates increase by
MELBOURNE across the city although in far smaller numbers. 4% during the year. This uplift comes off the back of
NO. OF CENTRES 228 Unlike Sydney which has started to see companies an 8% uplift the year before showing that demand
like WeWork move into the market and set out continues to outstrip supply within the city while
WORKSTATION RATES $506 aggressive growth plans, Melbourne sees mainly providers continue to up their game and provide
local activity. Over 77% of the centres operated higher quality and larger spaces, in both serviced
within the city are independent or single entities with and co-working variants.
63 64Mumbai AVERAGE DESK PRICE
: 2015 : 2016 : 2017 : 2018 (FORECASTED)
As the traditional office industry in Mumbai Occupancy rates within the traditional office sector
remains stable with steady leasing rates and remained consistent through 2017 which in turn
20%-30%
similar net absorption to previous years, we allowed for limited growth in desk rates. The same 400 380
375
continue to see a positive performance from the trend has not been seen within the Mumbai flexible
flexible office market within the city. market, despite the steady increase in centre
numbers.
OF NEW OFFICE UPTAKE
Reports indicate that between 20%-30% of new USD IS FROM
FLEXIBLE
327
office uptake in the city is from flexible office 2017/18 saw average rates increase by 15%
310
operators with the number of centres increasing by in Mumbai to $375 on the back on growing
8% during 2017/18 to nearly 160 flexible locations. demand and higher value locations.
300 OFFICE OPERATORS
Dedicated serviced offices remain the largest With other cities in India providing richer targets
sector of the flexible industry in Mumbai, during 2017/18 the pricing increase seen within
but 2017 saw the continued rise of pure co- Mumbai, one of the highest increases in Asia Pacific,
working environments alongside the much indicates that demand may well be starting to
more popular hybrid office which now make impact the market and the pressure is on operators
up over 30% of the supply. to increase supply across the city.
The growing presence of co-working and hybrid Not only is demand increasing but Instant’s
providers across Mumbai has meant we have proprietary data shows that the type of occupier is
seen further decentralization of operators with also changing. Enquiries for 25 or more desks rose
independent providers offering more agile space by 20% during 2017/18 as larger companies are
compared to the larger multi-location operators. considering flexible space as the locations become
better suited to corporates with larger footprints and
Despite this, Regus remain the single largest improved private space. MUMBAI
operator in Mumbai with more than 24 different
locations Local providers such as Awfis, DBS NO. OF CENTRES 158
and iKeva who operate multiple locations across WORKSTATION RATES $375
Mumbai are also expanding within the city as
demand continues to grow.
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