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With the central business district (CBD) already containing 83 percent of the flexible workspace stock, operators may increasingly search for other locations outside the city.
Flexible workspaces may continue expanding to hotel and retail spaces on top of decentralising to fringe areas, as vacancy in the central business district begins to tighten up, reported Singapore Business Review citing Colliers Research.
The expansion into hotel and retail spaces was seen as an important trend in the industry, after Justco moved into a 60,000 sq ft-wide space in Marina Square mall in the second quarter of 2018.
IWG’s Spaces also occupied a total of 35,000 sq ft for two floors of TripleOne Somerset in May and four floors of One Raffles Place launched in July.
The top seven operators in Singapore, meanwhile, hold 65 percent of the market, with over half of that occupied by IWG, JustGroup and WeWork.
With the central business district (CBD) already containing 83 percent of the flexible workspace stock, operators may increasingly search for other locations outside the city.
Locations in the city fringe and suburban areas, having 12 percent and five percent of the flexible workspace stock respectively, might present significant room for growth for operators.
In the middle of strong competition in the flex workspace segment, industry consolidation is also seen to go on via a collaboration between operators and landlords, acquisitions and mergers, or international operators entering the market.
Colliers, however, noted that several small players have closed.
Most closures come from single-space, small-sized operators having an average floor space of 7.500 sq ft, seemingly small compared to currently operating centres having 17,000 sq ft and the average net lettable area (NLA) of incoming supply at 42,000 sq ft.
Despite these closures, the sector is expected to grow by 24 percent by year-end and slow down slightly to 15 percent by 2020 because of higher base and tight vacancy rates.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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