Flexible workspace not just for Millennials

Flexible workspace not just for Millennials

25 August 2017

Co-working space is gaining momentum every day and it’s being driven by a number of factors: the rise of freelancers and start-ups, technological change, a shift toward self-employment and the greater numbers of Gen Y workers, the so-called Millennials born between 1980 and 2000.

The AFR reports that the workplace culture favoured by Millennials – project-based, people-focused and with plenty of shared space – will only get stronger as that generation becomes a greater proportion of the workforce. By 2025, Gen Y will represent 42 per cent of the Australian workforce, on Deloitte figures.

And this growing trend has not gone unnoticed by the big Australian REITs, including GPT Group and Dexus to name a few. GPT launched Space&Co in May 2014, while Dexus Property offered a separate site under the Dexus Place banner in May 2015.

Peter Black, head of workplace solutions at Colliers International, says the biggest shift he sees in coming years is that flexible workspace will become a key component of many companies’ workplace and real estate strategies, for occupiers and building owners.

“Flexible workspace is not just for millennial freelancers or tech start-ups any more. Large, multinational companies are increasingly taking on space at flexible workspace operators or integrating shared working spaces into their own environments,” Mr Black said.

Alongside the freelancers and start-ups who populated the early hubs have come larger businesses and major corporates such as Sensis, Suncorp, NAB and Australia Post.

The blue-chip players like the flexibility of co-working spaces for project-based work and their Millennial staff are at home in the collaborative, shared space of such facilities.

“This trend has been widely adopted in other global cities such as New York, where IBM recently agreed to a membership deal for all desks at WeWork’s 88 University Place, the first reported case of a single corporation taking an entire co-working site,” Ms Paterson said.

The AFR also reported that since 2013, space occupied by the sector has increased almost 300 per cent, new figures from Knight Frank show. The co-working industry now occupies 193,192 square metres of space in facilities across six capital cities, equivalent to 0.6 per cent of total office stock.

“Sydney has enjoyed the highest growth in terms of amount of space growing by 65 per cent while Melbourne grew by 63 per cent over the 2017 year,” said Knight Frank researcher Kimberley Paterson.

Since it entered the local market in October last year, WeWork has taken up more than 26,000 sq m across five locations in Sydney and Melbourne.

It is the largest single co-working provider in Australia with a 13.6 per cent market share. Other big players include Hub Australia and WOTSO, the co-working facility run by listed player BlackWall.

Ms Paterson said the rise in demand for more flexible working spaces will see the trend continue to grow rapidly which is likely to impact on traditional leasing principles in the future.

As the coworking industry gains momentum and sophistication, demand will continue to increase with workers seeking greater flexibility and amenity in how and where they work.

According to the ABS, Australia has about one million contractors accounting for 9% of the workforce with Melbourne’s share of freelancers sitting at 12%. It has been estimated freelancers will make up 40% of the workforce by 2020.