INDUSTRY TRENDS, PROPERTY ADVICE
The boom of Flexible Co-Working Spaces and their place in future developments
Posted by Development Ready on Jun 18, 2019

Co-working sites in Australia are experiencing significant growth across the capitals as leading global workspace provider Spaces expands into Perth.

IWG, the parent company to co-working brands Spaces and Regus, has recently leased levels one and two in Raine Square’s newly built glass commercial building and the top floor of heritage-listed building The Wentworth.

Spaces, which already has co-working and meeting spaces in Sydney and Melbourne, is building an international network of shared office space structured around short-term leases – but they’re not the only ones.

2018 saw more space leased to co-working operators than in the previous three years combined. JLL’s head of office leasing Australia Tim O’Connor said there had been a marked increase recorded in Australia’s CBD markets from 2015, with the expansion of co-working operators having a significant impact on office markets.

Melbourne is currently at the top of the list, accounting for almost half of the total number of co-working spaces in the nation. According to research by LaunchVic, the State Government's start-up agency, co-working spaces in Melbourne have grown by 960% over the past three years.

“Multinational co-working operators started their expansion in Sydney and Melbourne and have now moved into Brisbane and Perth,” Mr O’Conner said.

Savills Australia research and consultancy director Shrabastee Mallik, has made similar comments in regards to the sector’s expansion, saying “in 2018 we saw Brisbane and Perth emerging as key destinations for co-working groups and we will see this continue this year.

“Particularly in Perth, where it’s a lot cheaper at the moment, so they will look to capitalise on this and set up the space in line with growing employment forecasts in Perth and Brisbane.”
 

Hotels to get involved with co-working
A growing number of hotels are also looking to get involved in the flexible workspace boom, by transforming underused spaces in communal areas or outdated business centres into modern, vibrant co-working outfits.

This has already taken shape overseas with the Virgin hotel in Chicago offering a monthly membership for its co-working space, the Virgin Commons Club. As well as flexible desk arrangements, the model offers a bar, private meeting areas, free drinks, a library, Wi-Fi and wireless printing.

The lobby of the Ace Hotel in New York has been designed to attract co-workers with multiple power outlets, communal tables and a lobby bar that serves specialty coffee and gluten-free brownies.

These spaces are designed to appeal to a broader group of workers, not solely high-flying international business executives looking for a quiet spot to answer emails. 

While New York’s Ace Hotel does not charge co-workers to utilise the space, they see a business case for allowing it. It encourages more traffic to onsite bars and coffee outposts, while simultaneously encouraging “brand awareness,” Lauro Ferroni of capital markets research at JLL has noted.

In other words, someone who works in the Ace Hotel lobby in New York may be more likely to one day book a stay at an Ace Hotel in London.

“There’s a natural confluence between co-working and hotels,” says Tom Carroll, Head of EMEA Corporate Research at JLL.

“The hospitality industry is all about providing high-quality service and amenities to create a good user experience – and that’s what today’s workforce is increasingly coming to expect from the spaces they work in, whether that’s a traditional office, a hotel lobby or a co-working outlet.” 

Not all hotels, however, are offering space for free. Some operators have monetised work-friendly spaces in a model that is more akin to traditional co-working.
 

Restaurants, Cafés and Bars
“Co-working has been occurring in the F&B sector for a long time on an informal basis,” says Adam Griffin, Director, Foodservice Consulting at JLL.

“With the popularity of co-working continuing to rise, many restaurants are now looking at it as a new opportunity to activate space during morning and afternoon periods that would otherwise be sitting empty.”

While some restaurants are going it alone with advertising their space, others are signing up to services like KettleSpace, Spacemize and Spacious, which offer a network of restaurants open for daytime co-working.

Members are charged a monthly fee for access to all locations, typically between 8.30am and 5pm on weekdays when business tends to be slow – and restaurants not only create a new revenue stream but maintain a buzzy ambience, which can help attract customers.

Costs are generally lower than traditional co-working facilities although that is reflected in fewer facilities and restricted hours. Scottish craft brewery and pub chain Brewdog, however, have recently introduced hot-desking at three of its London pubs – including a dedicated area for power outlets, a printer and stationary.

Mr Griffin believes that while restaurants will only take a very small share of the overall market, this emerging work model is a sign of the popularity of co-working in general.

“While this type of co-working is unlikely to become the next big thing, I think demand will increase and restaurants could certainly make it part of their long-term strategy to get more value out of their space.”

Nevertheless, demand for quality alternative workspace is growing. As most international trends tend to make their way to Australia’s shores as well, we’re likely to see more consideration for flexible work spaces in future development projects.

 

*image, Spaces, Perth - The Wentworth


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