Co-workspace trend drives office market

A co-workspace in Makati City. (Work Folk)

The trend in so-called collaborative spaces will be among the key growth drivers of the Philippine property market, according to a new report of Santos Knight Frank (SKF), the country’s leading real estate provider.

Citing the report on workspace occupier solutions by SKF’s mother firm Knight Frank titled (Y)OUR SPACE, SKF said the demand for flexible or co-workspace is expected to accelerate globally, including in the Philippines, as more than two-thirds of multinational companies plan to increase their use of such collaborative space over the next three years. In terms of percentage, that is 69 percent of global corporates planning to increase their use of co-working space and 80 percent expecting to grow the amount of collaborative space they use over the next three years.

A co-workspace is an office that caters to online-based workers such as telecommuters, startups, freelancers, artists, various professionals, and even students. Its growing popularity emanates from the sense of community such place fosters among its users and the speed by which companies can operate it compared to leasing a conventional office space.

The SKF report added that 44 percent of surveyed companies said flexible space would constitute up to a fifth of all office space in the next three years.

The findings were based on a survey of senior executives in 120 global companies employing 3.5 million people worldwide and occupying an estimate 22 million square meters (sqm) of office space or more than four times the size of Metro Manila’s prime office market.

“Flexible workspace is a ‘sunrise idea’ in the Philippines. While a number of multinational companies with local offices have converted to flexible workspace to increase productivity, the concept is yet to be adopted by most local corporations. This presents local pioneers with a vast opportunity to reap the benefits of an optimized workplace,” said SKF chairman and CEO Rick Santos during the press presentation of the report Friday at the Shangri-la Makati.

Dr. Lee Elliot, Global Head of Occupier Research at Knigh Frank, who was also at the press briefing, said, “While co-working and serviced office operators have grown rapidly over the past five years, driven largely by start-ups and the freelance economy, this is only the tip of the iceberg with latent demand from global companies set to emerge over the next three years.”

William Beardmore-Gray, Global Head of Occupier Services and Commercial Agency at Knight Frank, also shared his insights.

“The demand for flexibility is the single biggest threat–and opportunity–to owners of office space. The recent boom in co-working is indicative of a structural change within commercial real estate whereby companies desire space that is flexible, highly serviced and aligned within the realities of doing business in an age of disruption. Some co-working operators have capitalized on this already, but it is imperative that owners and developers react to the new reality where the customer is king,” said Beardmore-Gray.

The local co-workspace industry started two years ago and now comprised 110 sites operated by both local and global companies like Common Ground, Regus and WeWork. There is no ready data as to the actual size of the market but Joey Radovan, SKF vice chairman and head of occupier services and commercial agency, said each operator’s takeup range from 2,000 to 5,000 sqm.

There are also the collaborative spaces in the residential and retail fronts that are forecast to drive the growth of the real estate industry. Co-living spaces and condormitels like GRID by First Georgetown Ventures was introduced to the market this year while malls have been more open to pop-up concept stores which share retail spaces to accommodate smaller, artisanal and community vendors.

Aside from collaborative space, SKF said the other trends driving the Philippine property market are the 31 percent growth in foreign direct investments during January to August this year, regional expansion of business process outsourcing companies, the 9.5 percent growth in foreign tourist arrivals in the third quarter, and warehouse and storage expansion due to a booming e-commerce industry and continued growth of traditional retail.

p: wjg

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