Co-working sector enjoys 300 per cent increase

Co-working sector enjoys 300 per cent increase

4 May 2018

Figures from Knight Frank research show the number of shared working spaces increased almost 300 per cent from 2013 to 2017, to 309 nationwide, reports The Australian.

The flexible workspace industry now occupies 193,190 square metres across six capital cities, equivalent to 0.6 per cent of all office stock.

A recent survey commissioned by JLL Property Group found the number of freelancer workers in Australia was 3.7 million, or 30 per cent of the workforce, with the figure expected to rise significantly by 2020.

Among the biggest operators in Australia are the American-owned WeWork, the Dutch-founded firm Spaces, Brad Krauskopf’s Hub Australia, and tech incubator Fishburners. However, a raft of local operators is also vying for a share of the growing market.

Local landlords Dexus (Dexus Place), GPT (Space & Co.) and ISPT (Flex by ISPT) have stepped up to provide their own flexible workspace options.

“The nature of office space for anyone has changed,” said Rob Christie, chief executive of Christies, operator of six co-working spaces in Brisbane, Sydney, and Melbourne, including the largest co-working space in the nation (in Brisbane) with over 23,000 square metres, or 4,500 desks.

“The idea of all these little pods where you sit at a desk all day—there’s fewer and fewer people doing that because things like laptops have eliminated the need,” he said.

Mr Christie added he would be surprised if the “traditional office with a reception desk, visitors chairs and people sitting out the back” would even exist in five to 10 years.

“As a principle that doesn’t work,” he said. “There’s a gravitation to change, which is communal, it’s about co-work and collaborative spaces with a sense of community.”

About 27 per cent of new space leased last year in Melbourne was taken by flexible workspace operators, said Tim Farley, a national director with Colliers International.

From a standing start less than a decade ago, providers now make up about 1.6 per cent of Melbourne’s CBD office mix and about 2.6 per cent of Sydney’s, according to Colliers.

Colliers International national director of office leasing Rob Joyes said 86 per cent of all enquiries for metropolitan office space was for smaller sub-1,000 square metre spaces.

“We expect the co-working trend to proliferate in 2018. In particular, we expect providers to target major corporates as opposed to just start-up companies like we have seen in the US,” Mr Joyes said.

Flexible workplaces are also pushing beyond the city centre to the outer suburbs.

Suburban co-working firm Waterman Business Centres has opened its third flexible office space in Melbourne’s outer eastern suburbs, reports The Sydney Morning Herald.

The Waterman Group offers 7,500 square metres of co-working space at Caribbean Park estate in Scoresby, 5,000 square metres in one of two towers at Chadstone Shopping Centre, and more office options at Casey Business Centre in Narre Warren, in Melbourne’s south-east.

Waterman Business Centre’s Chris Jbeily said rapid population growth led the group away from the city.

“The majority of the growth is in the outer suburbs. Commuting into the CBD is becoming more of a hassle,” Mr Jbeily said.

“But the spaces you can do in the suburbs are grander. The reason we are able to do such large spaces is because of where we are,” he said.

As the sector becomes more crowded, flexible workspace operators are bringing in lifestyle elements into their spaces to maximise the revenue return on the property, a Colliers International report suggests.

Melbourne-based CreativeCubes offer a concierge service which takes care of small but necessary tasks for clients, from mass coffee runs to personal dry-cleaning, says Fairfax Media.

“We want to create a phenomenal experience, not just cut up a building, go to Ikea, get some chairs, give someone a wifi password and (let them) get in,” says co-founder Tobi Skovron.

“Rather than being a landlord and sitting back and saying ‘this is the space, take it or leave it’, you come here for an experience. It’s all about service, it’s all about the experience.”

As the sector expands, however, some operators are having to cope with growing pains.

Industry giant WeWork’s revenue rose dramatically last year, but its costs rose faster, reports Business Insider.

The office-leasing startup is looking to raise more cash through its first bond sale, despite already raising billions in venture funding.

The accompanying bond documents reveal WeWork owes US$18 billion in rent on it’s 14 million square feet of office space.

WeWork’s revenue from memberships more than doubled last year, to $822 million, but expenses also more than doubled, to $1.81 billion. Net losses came to $934 million, according to Bloomberg