COLLIERS RADAR OFFICE | SINGAPORE | 11 SEPTEMBER 2018
Primary Author:
JM Tan Senior Analyst | Research +65 6531 8533 [email protected]
For further information: Tricia Song Director and Head Research | Singapore +65 6531 8536 [email protected]
Duncan White Executive Director and Head Office Services | Singapore +65 6531 8684 [email protected]
Jonathan Wright Director Flexible Workspace Services | Asia +852 2822 0577 [email protected]
Tang Wei Leng Managing Director | Singapore +65 6531 8688 [email protected] BREAKING NEW GROUND Opportunities amidst the rapid growth of flexible workspace and emergence of flexible leasing strategies in Singapore COLLIERS RADAR OFFICE | SINGAPORE | 11 SEPTEMBER 2018
Examining the Implications for the Summary & Recommendations 30% Singapore Office Market Flexible workspace stock in Singapore As of H1 2018, the flexible workspace industry is nearly tripled since 2015, with 2017 Expected YOY growth of total flexible already one of the top five occupier sectors in recording the steepest annual growth on workspace stock in Singapore over 2018 the CBD Premium and Grade A office market. record (+44% YOY). The sector looks to We are positive on the growth of the industry, be firmly on track for another 30% and view the increasing adoption of a ‘flex’ office growth in total stock over 2018, given component amongst businesses as a crucial operators’ aggressive expansion plans. catalyst for sustainable, long-term growth. months This is evidenced by a growing number of > We see an opportunity for occupiers 12-24 multinational corporations inking flexible to consider flexible leasing strategies, Average lease tenure of flexible workspace workspace membership deals to constitute a especially against the backdrop of memberships in Singapore ‘flex’ office component, which complements the landlord-favourable conditions in traditional ‘core’ leased office space. Singapore’s office market. Occupiers For the Singapore Grade A office market, flexible should exploit the current supply workspace growth should loosely support annual overhang and competitive landscape net absorption over 2018-2022, underpinned by to secure attractive commercial SGD390‒600 the sector’s generous square footage allocated terms from operators. to ancillary/amenity spaces, and the ability to Average pricing* for a hot-desk in flexible channel new occupier-types that were previously > We advise landlords and developers workspace centres across Singapore unable to lease prime office space viably without to review and reposition their assets a pooled membership model. given evolving real estate As for flexible workspace operators, the rapid requirements, and demand for growth of the industry will also likely see greater flexibility amongst occupiers. competition and further consolidation activity. SGD700‒900 Furthermore, we have observed some market > Landlords should also engage with saturation in the low- to mid-tier brackets, which the existing and potential tenant mix Average pricing* for a dedicated desk in will place pressure on flexible workspace to anticipate any product/amenity flexible workspace centres within the CBD occupancy levels and desk prices. We study the gap that can be effectively addressed sector in greater detail within this report.
via a suitable partnership with an *Based on 129 flexible workspace centres with published rates (non-subsidized). Average pricing refers to the interquartile range (between the 25th and 75th external operator, or self- percentiles). Denoted in Singapore Dollar (SGD) per month.. USD1 = SGD1.368 as of JM Tan administered flexible workspace. 31 August 2018 Senior Analyst Source: Colliers International Singapore Research Research | Singapore
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TABLE OF CONTENTS
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STILL FAST: STRONG MOMENTUM INTO 2018 4 STILL FURIOUS: COMPETITION HEATS UP ON SUPPLY 10
Total flexible workspace footprint in Singapore Flexible workspace supply poses a challenge to nearly tripled since 2015 4 under-performing operators 10
Flexible workspace now ranked among top five Top seven players control more than 60% of occupier sectors in CBD prime office market 6 Singapore flexible workspace market 10
Orchard Road gaining interest, retail-to-flexible Small- to mid-sized operators facing saturation, workspace conversions picking up 7 further consolidation expected 11
Focus shifting to smaller buildings given tight Flexible workspace attractively priced amidst rising availability in Grade A market 8 office rents in Singapore 12
KEY RECOMMENDATIONS 13
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STILL FAST: STRONG MOMENTUM Fig. 1: Total Stock, Supply and YOY Growth of Flexible Workspace NLA YOY Growth INTO 2018 (‘000 sq ft) (%) 4,000 60% Total flexible workspace footprint in Singapore nearly 3,000 44% tripled since 2015 40% 2,000 31% 30% 2017 was a whirlwind year for the flexible workspace sector, which grew 44% YOY in terms of total real estate footprint across Singapore, marking 20% 20% 1,000 the fastest annual growth in the sector’s history. This encompasses coworking spaces and serviced offices. 0 0% According to Colliers International's research, flexible workspace now 2016 2017 2018F 2019F occupy approximately 2.7 million sq ft (251,000 sq m) across Singapore, nearly tripling from about 1 million sq ft (90,000 sq m) at the end of 2015 Forecast Supply Net Supply (YTD for 2018) (Fig. 1). Cumulative Stock YOY Growth (%) Source: Colliers International Singapore Research Fig. 2. Selected Flexible Workspaces Transactions in H1 2018
Flexible Workspace Estimated Size Location Operator (sq ft) Growth was driven by the entry of operators from overseas markets, while Campfire 139 Cecil Street 85,000 being supplemented by the expansion plans of incumbent operators looking to establish new locations (Fig. 2). WeWork 8 Cross Street 60,000 Following 2017's rapid expansion, we expect total flexible workspace Spaces Paya Lebar Quarter Tower 1 52,000 footprint to grow between 30% to 35% YOY for full-year 2018, or Spaces TripleOne Somerset 35,000 approximately 670,000 sq ft (62,000 sq m).
WeWork 22 Cross Street 29,000 This should closely match 2017's record-breaking net expansion of 680,000 sq ft (63,000 sq m) in total flexible workspace stock. Regus Vision Exchange 26,000
Found 100 Amoy Street 22,000
JustCo Macdonald House 16,000
The Work Project Parkview Square 15,000
Source: Colliers International Singapore Research 4 COLLIERS RADAR OFFICE | SINGAPORE | 11 SEPTEMBER 2018
A significant majority of the Singapore market's More recently, flexible workspaces have taken Fig. 3: Distribution of Flexible Workspace Stock total flexible workspace footprint (84%) is space in the fringe areas of the CBD in addition located within the Central Business District to the initial core clusters around Raffles Place Suburban, (CBD) (Fig. 3). As of 30 June 2018, the CBD hosts (Fig. 4). This provides a wider range of choice 7% some 2.3 million sq ft (211,000 sq m) of flexible and cost-alignment for potential flexible City Fringe, workspace, versus 2.7 million sq ft (251,000 sq workspace occupiers. 9% m) island-wide. Looking ahead, we expect the flexible 2.7 million sq ft In terms of growth, the sector's total CBD workspace footprint to grow in non-core CBD (NLA) footprint has more than doubled since 2015, locations, and decentralized submarkets. For from 969,000 sq ft (90,000 sq m) to 2.3 million instance, four flexible workspace deals were sq ft (211,000 sq m) (Fig. 4). This translates to a closed in the Orchard Road micro-market during CBD, 84% growth rate in the CBD averaging 1% of stock the first six months of 2018, as discussed in the per annum. next sections. …we expect the Source: Colliers International Singapore Research flexible workspace footprint to grow Fig. 4: Flexible Workspace Density* and Stock in Singapore Core CBD (2015 vs. H1 2018) in non-core CBD locations, and decentralized submarkets.
2015 H1 2018
969,000 sq ft 2,274,000 sq ft
*Density refers to total flexible workspace (net lettable area; sq ft) per address, which may include more than one operator in some buildings. Source: Colliers International Singapore Research 5 COLLIERS RADAR OFFICE | SINGAPORE | 11 SEPTEMBER 2018
Fig. 5: Top 5 Occupier Sectors in the CBD Premium and Grade A Office Market (H1 2018)
5% Top 5 45% 10% 6% Occupier Flexible Sectors Financial Professional Energy & Tech Services Services Shipping Workspace (by % share of CBD Premium & Grade A office stock) 13%
Flexible workspace Source: Colliers International Singapore Research will constitute a growing proportion of Flexible workspace now ranked Flexible workspace will constitute a growing operators is well-matched with tech companies’ proportion of office stock as more corporations high growth momentum and their need for rapid office stock as among top five occupier sectors in more corporations take up a ‘flex’ component as part of their headcount scalability. commercial leasing strategy. take up a ‘flex’ CBD prime office market Overall, we view the increasingly widespread component as part As of 30 June 2018, flexible workspace operators Notably, the banking and financial services sector adoption of a ‘flex’ office component amongst of their occupy 4.5% (Fig. 5) of CBD Premium and Grade is an early adopter of flexible leasing strategies, businesses as a key catalyst for sustainable, long- commercial A office stock, placing it among the top five despite initial concerns around privacy and term growth of the flexible workspace industry. leasing strategy. occupier sectors in Singapore’s prime office security. HSBC and Standard Chartered are both This is evidenced by a rapidly growing number of market. The other major occupier sectors are: examples of multinational banks that have taken multinational corporations inking flexible financial services (45%), professional services up large desk counts in flexible workspaces across workspace membership deals. Asia Pacific. (13%), energy and shipping (10%), as well as the For the Singapore Grade A office market, the technology sector (6%). Another interesting adopter is the insurance growth of flexible workspace should loosely In our view, these market share ratios are likely industry, where a large proportion of employees support annual net absorption over 2018-2022, to rebalance gradually as adoption of new flexible may be in the sales agency function – an underpinned by the sector’s generous square leasing models - Flex and CoreTM and City Campus inherently mobile occupation well-suited for footage allocated to ancillary / amenity spaces, - will gradually proliferate to a wider cross- using flexible workspaces as drop-down spaces and the ability to channel new occupier-types section of the occupier market (refer to our 2018 across the city. that were previously unable to lease prime office space viably without a pooled membership APAC Flexible Workspace Outlook report for As for the technology sector, the ready model. more details on new flexible leasing models). availability and expansion of flexible workspace
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Orchard Road gaining interest, JustCo leasing 57,000 sq ft (5,300 sq m) of retail Meanwhile, Central Region retail rents have space at Marina Square in late 2017. chalked up a long-running decline over the past retail-to-flexible workspace 13 quarters, as of Q2 2018. This is likely an adaptation to the tough retail conversions picking up leasing climate in Singapore. Based on latest data These factors may have prompted landlords to We expect retail-to-flexible workspace from the Urban Redevelopment Authority (URA), explore leasing to flexible workspace operators, conversions to pick up pace in the years ahead. Singapore’s retail vacancy currently stands at in a bid to achieve more stabilized occupancy for 7.3% as of Q2 2018, with approximately 4.8 their retail properties. This comes on the back of a few notable deals in million sq ft (448,000 sq m) of vacant floor area This is in spite of the trade-off being lower gross recent quarters, such as Spaces (a subsidiary of in shopping centres and retail podiums island- rental income, as office rents are typically lower IWG) taking up 35,000 sq ft (3,300 sq m) at One wide. Raffles Place Shopping Mall in March 2018, and than retail rents.
Simultaneously, there appears to be heightened Fig. 6: Flexible Workspace Distribution in the Singapore CBD (by Transaction Year) interest amongst flexible workspace operators in expanding within the Orchard Road micro- market, which is also Singapore's premier shopping district.
Beach Road Four new flexible workspace leases were transacted along Orchard Road over the first six months of 2018 (Fig. 6). These include 15,000 sq ft (1,400 sq m) by The Orchard Road Great Room at Ngee Ann City Tower B, JustCo leasing some 16,000 sq ft (1,500 sq m) at Macdonald House, and Spaces' new location City Hall spanning 35,000 sq ft (3,300 sq m) at TripleOne Somerset. New-to-market flexible workspace player, CoCRE8, leased about 4,000 sq ft (370 sq m) of office space at the International Building. All the above deals marked each respective Raffles Place / operator’s first foray into the Orchard Road Shenton Way / New Downtown Legend micro-market. Tanjong Pagar 2016 & earlier 2017 2018 YTD
Source: Colliers International Singapore Research, Google Maps
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Based on Colliers International's research, the flexible workspace footprint Fig. 7: CBD Flexible Workspace Distribution (by Square Footage) in Orchard Road currently comprises approximately 8% of the island-wide total (Fig. 7) by square footage. However, the highest concentration of flexible workspace remains in the Raffles Place / New Downtown and Shenton Way / Tanjong Pagar micro- markets (Fig. 7), which host 41% and 29% of Singapore's total flexible workspace footprint respectively. New flexible workspace lettings over 2017-2018 YTD have largely continued in the same vein, being highly concentrated in these two core CBD micro- markets as denoted in Fig. 6. Looking ahead, we anticipate the growth rate in Orchard Road and Beach Road to be slightly higher than the rest of the CBD, as operators ramp up their presence there from a relatively lower base.
Source: Colliers International Singapore Research Fig. 8: CBD Flexible Workspace Lettings (by Building Grade)
Proportion Focus shifting to smaller buildings given tight (by NLA) availability in Grade A market 100% Delving into the leases signed by flexible workspace operators over 2016 to H1 2018, we observe a steep decline in the proportion of deals transacted in 80% 33% 48% Premium and Grade A properties, as compared to Grade B and other office 63% properties. Flexible workspace lettings within CBD Premium and Grade A 60% buildings made up 63% of all deals in 2016, by square footage (Fig. 8).
40% However, this fell sharply to just 33% of all deals in 2018, reflecting the tight 67% availability of suitable floor plates in the CBD Premium and Grade A market 52% 20% 37% at present. Over 2018-2019, flexible workspace operators will likely increasingly target 0% Grade B office properties as well as retail spaces, given the tight vacancy 2016 2017 H1 2018 rate (5.5% as of Q2 2018) in the CBD Premium & Grade A office market. In addition, a number of Grade A buildings already have operators in situ that Premium & Grade A Grade B & below have secured exclusivity clauses.
Source: Colliers International Singapore Research
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Summary of Flexible Workspaces in New Grade A Office Completions over 2018
The race among Paya Lebar Quarter – Q3 2018 operators to stake Frasers Tower – Q2 2018 their presence has In Q2 2018, The Executive Centre launched a Paya Lebar Quarter is an example of a extended towards 21,000 sq ft (1,950 sq m) new centre in the newly development where the landlord engineers a blend of third-party flexible workspace operator upcoming completed Frasers Tower, a 663,000 sq ft (61,600 sq m) Grade A office building located in the and owner-initiated brand within the same commercial project. The City Fringe Grade A mixed developments as Tanjong Pagar precinct. This marks the upmarket flexible workspace operator’s sixth location in development with 880,000 sq ft (81,800 sq m) of well. Singapore. office space, will have Spaces operating a 52,000 sq ft (4,800 sq m) center at Tower 1, whilst Most of the Lendlease pilots its co-located proprietary Premium and flexible workspace brand. Grade A office supply due for completion over 2018-2020 already have a flexible workspace component secured, whether managed via a 18 Robinson – Q3 2018 third-party 18 Robinson, a new build in Raffles Place due to operator, or on the complete in Q3 2018, has signed IWG-subsidiary developer's own Spaces as an anchor tenant occupying four floors, initiative. or 32,000 sq ft (3,000 sq m). This comprises approximately one quarter of the 136,000 sq ft (12,600 sq m) development's leasable floor area.
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STILL FURIOUS: COMPETITION Top seven players control more than 60% of Singapore flexible workspace market HEATS UP ON SUPPLY Based on Colliers International's research, the top flexible workspace players by square footage in Singapore are namely: IWG (which includes the Spaces and Regus brands), WeWork, JustGroup (parent entity of JustCo and Flexible workspace supply poses a challenge to JustOffice), The Executive Centre, Servcorp, Campfire, and The Great Room. under-performing operators Fig. 9. Top Flexible Workspace Operators in Singapore (by Size) We have observed a stark differential between top-tier and under- performing operators in the flexible workspace sector, with some traditional Flexible Workspace Estimated Portfolio Size Market Share serviced office providers facing occupancy challenges amidst the influx of Operator (sq ft) (%) new operators. In parallel, the volume of closures and distressed acquisitions have accelerated over the past 18 months. IWG 650,000 23.5% Based on Colliers International's research, space utilization rates within WeWork 344,000 12.5% flexible workspaces vary widely, with an average daily utilization rate of 25% on the low end in under-performing centres, to above 90% utilization in the JustGroup 331,000 12.0% more popular locations. The Executive Centre 153,000 5.6% We also observe generous offerings of sign-on membership incentives escalating rapidly in this competitive climate. Incentives may range from one Servcorp 102,000 3.7% month's rent-free, up to six months' rent-free for a typical 12- to 24-month Campfire 85,000 3.1% flexible workspace membership tenure. In parallel, free trial offerings may run from a typical day pass, up to an entire month's free usage. The Great Room 76,000 2.8% Additionally, flexible workspace operators have sought to diversify their Top players 63.1% revenue streams. For instance, event spaces may be available for lease, whether during working hours or off-peak periods, which enable additional Source: Colliers International Singapore Research monetization of the available space that has been fitted out to premium standards. The top seven players currently hold close to two-thirds (63%) of the total flexible workspace market (Fig. 9) by square footage, as of 30 June 2018. Increasingly, operators have begun partnering with on-site food and The remaining share (37%) of the overall market is shared amongst more beverage (F&B) or wellness providers, offering low base rents in return for a than 110 other operators. share of profits with gross turnover rent (GTO) structures. This allows the operator to capture the discretionary spending of workspace users, and fully Notwithstanding, we expect market dynamics to continue rebalancing, given aligns the business goals of the operator with the third-party vendor. the inflows of new-to-market players such as Campfire, Distrii and Ucommune, and the possible expansion and/or consolidation of small- to mid-sized operators.
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Small- to mid-sized operators facing saturation, Moreover, scaling up also enables operators to better leverage economies of scale from technological investments or capital expenditures (e.g. bulk further consolidation expected purchases of furniture). The most saturated market segment currently appears to be single-location Based on Colliers International's research, the average location size leased operators managing spaces below 2,000 sq ft (186 sq m), which by flexible workspace operators in Singapore has indeed been trending coincidentally corresponds with the median size of flexible workspace upwards each year since 2015 (Fig. 10). Flexible workspace leases in 2015 centres shuttered since the industry's inception in Singapore. averaged approximately 11,800 sq ft (1,100 sq m). The rapid supply growth of small-sized, single-space flexible workspace This grew to about 26,600 sq ft (2,500 sq m) in 2018 YTD, more than double operators may have outpaced underlying market demand, which mainly that of the average size transacted during 2015. stems from small-sized businesses or freelancers. We expect this to place pressure on flexible workspace occupancy levels and desk prices We expect further consolidation in Singapore’s flexible workspace sector, with mergers and acquisitions ramping up over 2018-2020. In our view, larger players with sizable footprints of more than 50 desks per location, and a multi-location portfolio, are better equipped to cater for the August 2017 saw the acquisition of Singapore-based coworking start-up 1 next lap of growth from corporations seeking a flexible leasing strategy. SpaceMob by the US-based global flexible workspace chain WeWork . The flexible workspace requirement from multinational corporations Within less than a year, WeWork went on to acquire Shanghai-based naked 2 typically span hundreds of desks within a single market (e.g. Singapore). Hub in April 2018 for a sum of USD400 million (SGD500 million) , shortly after the anticipated JustCo and naked Hub partnership fell through in January 20183. Fig. 10: Average Size of Flexible Workspace Lettings A SGD237 million (USD177 million) joint coworking platform between 4 2015 2016 2017 2018 YTD Frasers Property, GIC and JustCo was also announced in May 2018 . We anticipate that larger operators will look to supplement their organic growth with acquisitions of smaller players, or those with a niche offering 26,579 that can either complement or diversify their existing offering. We may also 23,648 21,620 see some mergers of small- and mid-sized operators to create scale. Nevertheless, we observe that single-space providers perform well when they can cultivate a strong competitive proposition, with a specific focus and 11,780 genuine added value for the entrepreneurial community in Singapore. Furthermore, a healthy level of competition within the sector is a definite positive for occupiers, as well as the sustainable growth of the flexible Average Size (sq ft) workspace sector.
Source: Colliers International Singapore Research
______3 1 Goh, B. (2018) "China-based co-working operator naked Hub eyes 200 locations by 2020". Reuters, January 2018. Lee, Y. and Ramli, D. (2017) "WeWork to Pump $500 Million Into Southeast Asia, South Korea". Bloomberg, August 2017. 4 2 Huet, E. and Chen, L.Y. (2018) "WeWork Is Acquiring China’s Naked Hub for $400 Million". Bloomberg, April 2018. Mui, R. (2018) "Frasers Property, GIC, JustCo invest US$177m to develop co-working space platform across Asia". Business Times, May 2018. 11 COLLIERS RADAR OFFICE | SINGAPORE | 11 SEPTEMBER 2018
Flexible workspaces attractively priced amidst rising Fig. 11: Average Pricing Range of Dedicated Desks in the CBD office rents in Singapore SGD per month $1,300 Interquartile Range Median Based on Colliers International's research, the typical price of a flexible hot- desk membership in Singapore is around SGD390 to SGD600 (USD285 to USD439) per month (Fig. 12), using the interquartile range of published desk $1,100 rates as a gauge. This figure excludes subsidized rates, such as for incubator spaces. $900 $800 $750 $750 $750 $760 $775 For users that require an dedicated desk within the CBD, the typical pricing $700 ranges from SGD700 to SGD900 (USD512 to USD658) per month. This implies an average lease rate of about SGD7.00 to SGD9.00 (USD5.12 to $500 USD6.58) psf pm, assuming 100 sq ft of office space per desk. CBD Raffles Place/ Shenton Way/ City Hall Orchard Road Beach Road New Tanjong Pagar We view flexible workspace as attractively priced, given that average CBD Downtown Premium and Grade A gross effective rents stood at SGD8.82 (USD6.45) psf Source: Colliers International Singapore Research pm in Q2 2018, and set to rise further. Desk rates are fairly consistent across CBD micro-markets (Fig. 11), with the Against the backdrop of rising office rents and uncertain global economic median desk rental ranging from SGD750 (USD548) in the least costly conditions, occupiers may opt to keep their real estate portfolio as lean as districts, to SGD800 (USD585) in the priciest micro-market, Raffles Place / possible with new flexible real estate strategies. Flexible real estate New Downtown. It is important to note that a flexible workspace strategies offer the twin benefits of shorter-term lease tenures, coupled membership is an "all-in" figure. Users do not have to worry about capital with scalability to cater to fluctuating headcount without committing to expenditures (e.g. fit-out costs, furnishings, IT installations) typically excess office space that may be under-utilized. associated with traditional office leases. Colliers's 2018 APAC Flexible Workspace Outlook found that occupiers Moreover, the Singapore office market is currently on a multi-year upcycle appreciate the flexibility of directly correlating headcount to real estate after bottoming out in mid-2017. We expect CBD Premium and Grade A costs, and moving away from long-term, fixed contracts, via flexible leasing rents to rebound rapidly, rising up to 20% over 2017 rates by end-2019. strategies such as the Colliers-led Flex and CoreTM or City Campus models.
Fig. 12: Average Pricing Range* for Flexible Workspace across Singapore and within the CBD
SGD390‒600 SGD425‒650 SGD700‒900 Average pricing* for a hot-desk in flexible Average pricing* for a hot-desk in flexible Average pricing* for a dedicated desk in flexible workspace centres across Singapore workspace centres within the CBD workspace centres within the CBD
*Based on 129 flexible workspace centres with published rates (non-subsidized). Average pricing refers to the interquartile range (between the 25th and 75th percentiles). Denoted in Singapore Dollar (SGD) per month. Source: Colliers International Singapore Research 12 COLLIERS RADAR OFFICE | SINGAPORE | 11 SEPTEMBER 2018
KEY RECOMMENDATIONS
For Occupiers For Landlords & Developers
The current rapid growth phase of the flexible workspace sector presents an For commercial developments, flexible workspaces have evolved from a ‘nice attractive opportunity for prospective users. to have’ option to a strategic essential, due to evolving occupier requirements. We recommend that landlords and developers proactively Portfolio Strategy: incorporate real estate approaches which best capture occupiers' rising > Consider the viability of alternative flexible leasing strategies, which interest in flexible leasing models, whether managed via a third-party combine traditional office leases with short-term lease tenures in flexible operator or a proprietary initiative. workspace centres. Benefits include: an opportunity to move away from Partnering Flexible Workspace Operators: long-term, fixed contracts, and the employee engagement upside associated with a community-focused, creative environment (refer to > Consider partnering with a flexible workspace operator that Colliers International's 2018 APAC Flexible Workspace Outlook report for complements each individual asset, as well as the overall portfolio more details on new flexible leasing models) > Structure commercial lease terms suiting a preferred partnership > Keep an inventory of short-term options in anticipation of fluctuating approach, and which reflect the interests of all parties involved. For headcount or abrupt expansionary requirements. Flexible workspace example, gross turnover rent structures are increasingly being considered allow businesses to adjust headcount quickly and directly to real estate in this market, while exclusivity clauses that primarily benefit operators costs, for short commitment periods (between 6 and 24 months) are losing favour Negotiation and Selection: Engaging Occupiers: > Understand the unique amenity profile, pricing and positioning of each > Engage with existing and potential tenants to anticipate any flexible workspace and the corresponding operator. This is key to optimal product/amenity gap that can be effectively addressed via a suitable alignment of the real estate portfolio with strategic and tactical needs partnership with an external operator, or self-administered flexible workspace > Exploit the abundance of flexible workspace supply, particularly the highly competitive small to mid-sized operator market segment, when > Understand the multitude of potential roles and depth that a flexible negotiating the best terms for a commercial real estate portfolio workspace can bring to the portfolio. Flexible workspace may act as auxiliary amenities for the tenant mix within the building, enhance the > Anticipate the effect of membership fee escalations given the relatively usable space value and overall appeal, or act as incubators or 'swing short membership tenures. For instance, agreements may specify fee spaces' for start-up / new-to-market companies that may not have escalations every 12-24 months upon renewal, which may compound adequate scale to secure a viable office lease very quickly
13 Primary Author: For further information, please contact:
JM Tan Tricia Song Senior Analyst | Research | Singapore Director and Head | Research | Singapore +65 6531 8533 +65 6531 8536 [email protected] [email protected]
Duncan White Contributors: Executive Director and Head | Office Services | Singapore +65 6531 8684 James Ong [email protected] Executive | Office Services | Singapore +65 6531 8668 Jonathan Wright [email protected] Director | Flexible Workspace Services | Asia +852 2822 0577 Kevin Soo [email protected] Director | Office Services | Singapore Landlord Representative Tang Wei Leng +65 6531 8671 Managing Director | Singapore [email protected] +65 6531 8688 [email protected]
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