Under many traditional arrangements, companies’ real-estate footprint involves floor space in conventional offices which is either owned outright or leased on long-term agreements.
Now, things are changing. A host of companies offer coworking spaces, turnkey office solutions and spaces for holding special meetings and events.
Australia is undergoing a flexible office revolution.
The magnitude of this should not be underestimated. In a recent report, real-estate services firm CBRE put the volume of stock allocated to flexible working space at 193,200 square meters across the six largest capital cities of Australia and at 60,000 square meters in Auckland and Wellington. Across the Asia Pacific, flexible office work space increased by 27 percent between 2017 and 2018 and by 56 percent in the year prior to that.
Going forward, more is yet to come. In a survey of 60 occupiers undertaken as part of the aforementioned CBRE report, half (50 percent) expected to use more coworking space over the next two years whilst 45 percent and 30 percent planned to use more meeting/event space and serviced office space respectively. Among larger responders (occupancy above 30,000 sqm), all planned to increase coworking space.
By contrast, more than half (52 percent) of all respondents planned to reduce their footprint in traditional leased/owned office space.
In response, providers are ramping up offerings. According to coworker.com, Australia has 253 operators within the co-working space whilst New Zealand has 62. Office Hub, an online marketplace for flexible office spaces, claims 1,001 providers on its books.
The best known player in this space is WeWork, which expanded into Australia in 2016 and now operates in Sydney, Brisbane and Melbourne. Others include Regus, Servcorp and Hub Australia.
This raises questions about what lies behind the push for this and how companies looking to adopt flexible working should go about doing so.
For answers, Sourceable spoke with Nicole Fitzgerald, National Director, Pacific, Workplace Strategy at CBRE, and Balder Tol, General Manager at WeWork Australia.
Fitzgerald says flexible work spaces come in several common forms.
First, there is coworking. Started in 2005 in San Francisco, this has traditionally involved either individual workers (often freelancers or entrepreneurs) or small companies paying a monthly fee in exchange for the right to use workspace in an environment which is shared with personnel from other companies. Under these arrangements, workers/companies can typically either hire specific desks in set locations or can choose instead to select any space available on the day under a hot desking arrangement.
According to Fitzgerald, however, the past two years have seen a shift as larger companies use coworking spaces to add flexibility to their portfolio. In response, providers are offering private office space which organisations can rent on a short term basis to accommodate 20, 30 or even 100 people. These are housed within larger coworking offices and often feature shared common spaces. Such spaces thus afford autonomy whilst still offering opportunities for networking and collaboration.
Next, meeting and event spaces enable companies to hold meetings and events offsite without needing to allocate space within their own tenancy for such purposes. In this space, Fletcher says town halls or team offsites have emerged as a popular location.
Third, there are turnkey arrangements. Under these, corporate tenants who require larger dedicated space on a short term basis turn to specialist providers who manage fitout and design and enable clients to walk into a tailored space and begin operating in a matter of weeks.
This, Fitzgerald says, will become increasingly popular amid a shift toward project based working. Increasingly, companies are bringing people both from across their own business and from a growing pool of external contractors and specialists into particular project teams to focus on a specific problem or task.
Co-working and turnkey arrangements, Fitzgerald says, enable dedicated space to facilitate this which can be secured on a timely basis.
According to Fitzgerald, all this is being driven by a need for companies to have greater flexibility to manage their real-estate portfolio as their requirements change. In the current environment, she says headcount and space requirements are being impacted by multiple factors. These include a growing number of people working from home and an increasing tendency to hire specialist workers with particular skills to perform specific short-term tasks as part of the gig economy. As well, headcount requirements change with mergers and acquisitions.
All this makes anticipating long-term space requirements difficult and drives a need for flexibility to enable upscaling or downscaling of real-estate footprint.
“If you can imagine the person who is the head of real-estate trying to figure out what headcount they will need to accommodate in six months’ time – let alone five or ten years or the length of a traditional lease term – it’s impossible to predict or foresee what type of environment and experience those people need to be effective,” Fitzgerald says.
“These factors are seeding the demand for flexibility. That might be expansion and contraction rights in their lease terms, continued adoption of activity based working and a lot more interest and use the different flexible space solutions on offer. All of these flexibility options allow a business to be efficient and effective with the accommodation that they have and still enable them to provide a great working environment for their people as their headcount fluctuates up and down over time.”
Tol, meanwhile, describes a push toward spaces which are dynamic and inspiring. In the case of WeWork, he says the company’s spaces are designed to facilitate collaboration and foster a sense of community and innovation. He says around 70 percent of WeWork members who participate in the company’s ‘TGIM’ breakfasts have found the events enable them to collaborate in some way.
“Work is changing. I don’t think people can deny that,” Tol said.
“Increasingly, it is apparent that larger companies are choosing a shared workspace to be part of a dynamic, more creative and entrepreneurial environment. At the same time, what employees want from their employers and work environment is shifting. Today’s workforce is increasingly mobile and more flexible. They’re choosing to work in environments that allow them to be inspired, thrive personally as well as professionally and feel part of something greater than themselves.”
When looking at flexible working, Fitzgerald and Tol say several issues should be considered.
When selecting environments, Fitzgerald says it is important to choose the right type of service and space to meet the situation and type of activities your people need to perform. Flexible spaces, she said, differ in terms of the density of people within the space, the services available, the variety of work settings they offer and the level of community engagement they curate as part of the experience. Accordingly, it is important for organisations to understand how they will use their space, what they want from it and which features will best assist their teams to deliver maximum results.
As well, the space should cater for a range of tasks. Those requiring privacy or confidentiality for certain tasks, for example, must be able to access small focused rooms which enable them to work on confidential documents or make calls without being heard or disrupted.
Beyond that, organisations must prepare their people for the change and ensure that workers maintain a connection to the broader organisation. When working with clients, Fitzgerald says much of CBRE’s effort is directed toward maintaining strong cultural connection and collaboration among people from multiple sites.
This is important, she says, both for people moving into the new space and for those who remain.
Tol, meanwhile, encourages workers and companies to come with an open mind and an ‘entrepreneurial spirit’. Much of the benefit of coworking, he says, involves connecting people from different industries in an environment which facilities advice sharing, idea workshopping and services exchange. He says WeWork has found that those who gain most from its facilities come ready to connect, collaborate, participate in events and interact with their office neighbours.
Around Australia, workforces are becoming more flexible.
In response, office spaces which cater for this are becoming more popular.