Australia’s flexible office market is rebounding as both local and international operators expand, and occupants increasingly embrace flexible workspaces.
CBRE’s recent report on Australian Flex Space showcases a positive industry outlook after a slower post-pandemic return to offices and some market consolidation.
According to CBRE’s data, the flexible office market in Australia’s major east coast cities grew by 2.1 per cent in the year leading up to June 2023. Flex operators currently account for 2.7 per cent of office space, a decrease from the peak of 3.1 per cent in early 2020.
Furthermore, CBRE’s 2023 Occupier Survey indicate that around 70 per cent of Australian-based respondents currently have minimal exposure (less than 10 per cent) to flex space.
However, this is projected to decrease to just 41 per cent in three years, suggesting a significant shift towards increased utilisation of flexible workspaces by occupiers.
“Evolving workplace dynamics have triggered the need for flexible space operators to rethink their offerings to remain relevant and appealing in a post-pandemic world,” CBRE’s Asia Pacific Head of Flexible Real Estate Sidharth Dhawan said.
“These offerings vary by tenure and customisation, ranging from “gym pass” like day memberships on the one end, through to fully turnkey managed spaces on the other. International operators now see Australia as a mature flex market offering growth potential and some are actively looking at opportunities, particularly in prime grade buildings.”
According to CBRE’s findings, a significant portion of upcoming office projects in Australia are anticipated to integrate flex space to meet the demand, especially from major corporations.
“Office landlords are strategically embracing the evolving working dynamics by exploring innovative solutions such as flexible office spaces and third spaces within their buildings.” CBRE’s Australian Head of Office Research Tom Broderick noted.
“This shift is driven by the changing preferences of tenants and the recognition that providing adaptable and versatile work environments can enhance tenant satisfaction, attract new occupants, and ultimately add value to their properties.”
There’s a noticeable divergence in the growth or contraction trajectory of Australia’s east coast flex markets, according to the report.
Brisbane is in a phase of notable growth after a period of consolidation, while Melbourne is experiencing the most contraction.
Sydney, with the highest flex penetration at 3.2 per cent, falls in between.
The higher sustenance of flex tenants in Sydney is attributed to a larger presence of technology and startup-oriented lessees.
Furthermore, offshore operators now constitute more than half of the flex office footprint on Australia’s east coast due to local operator consolidation, the report noted.
Additionally, the average size of flex centers has grown by 30 per cent over the past three years, averaging 2,300 square meters.
Liberty Flexible Workspaces, which has six flexible office sites in Western Australia said the flexible office market has performed well over the last 12 months.
Three of the groups Perth CBD assets are close to capacity, and the group said that demand is set to continue.