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Flexible workspaces in Singapore rose 44 percent last year as it occupied 680,000 sq ft of space – making it one of the top five occupier sectors within the Singapore office market, reported Singapore Business Review citing a Colliers International report.
With 2.3 million sq ft or 84 percent of the total flexible workspace footprint located in the CBD, the flexible workspace sector accounted for 4.5 percent of premium and Grade A office stock within the CBD.
Colliers expects the growing adoption of a “flex” office component as part of the commercial leasing strategy of corporations – in sectors such as insurance, banking and financial services and technology – to be a crucial catalyst for the flexible workspace sector’s sustainable and long-term growth.
“The growth of flexible workspace should loosely support net absorption in Singapore’s office sector over 2018-2022,” it said.
In fact, the flexible workspace footprint in Singapore is expected to grow 30 to 35 percent (or about 670,000 sq ft) year-on-year this year, said Duncan White, head of office services at Colliers International.
And given the tight vacancy rate for CBD premium and Grade A office space, White expects flexible workspace operators to target Grade B office properties as well as retail spaces to accommodate their growth.
“This expansion in non-core CBD locations and decentralised markets will offer a wider range of choice and cost-alignment for potential flexible workspace occupiers,” he added.
With this, retail-to-flexible workspace conversion will likely pick up pace in the coming years.
As at end-Q2 2018, retail vacancy in Singapore stood at 7.3 percent, with 4.8 million sq ft of vacant floor space across retail podiums and shopping centres islandwide, while retail rents within the central region have been on the downtrend over the past 13 quarters.
“These factors may have prompted landlords to explore leasing to flexible workspace operators, in a bid to achieve more stabilised occupancy for their retail properties,” said Colliers International senior analyst of research JM Tan.
“The trade-off is lower gross rental income for the property as flexible workspace operators will be paying office rents, which are usually lower than retail rents.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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