In Focus
COMMERCIAL PROPERTY | Staff Reporter, Singapore

Singapore's landlords tap into flexible workspace boom

CapitaLand rolled out its own 13,000 sq ft Flexi-Suites workspace and more landlords will follow suit.

The recent success and occupier demand for access to flexible workspace has resonated with some of the biggest landlords in Singapore, a report from Colliers revealed. Landlords who used to snub the idea of flexible workspaces two years ago are now scrambling to secure an operator within their developments, or better, produce their own flexible workspace brand.

Ascendas-Singbridge will be launching its own concept and Lendlease continuing to explore the best way of operating its new development Paya Lebar Quarter given new demands from corporate occupiers. “Part of our strategy is to have a mix of spaces available, some suitable for smaller start-ups and some suitable for the emerging corporate market. At the moment we are educating ourselves on this rapidly evolving sector to ensure that Paya Lebar Quarter has a market-relevant range of spaces and services for the immediate future,” said Paya Lebar Quarter managing director Richard Paine.

Meanwhile, KREIT continues to grow its KLOUD offering within Harbourfront and Keppel Towers, with a view of rolling it out throughout its regional portfolio.

CapitaLand has operators as tenants and in some cases partners but is also driving its own offering with the rollout of its Flexi-Suites brand at 20 Anson Road, utilising a whole floor of just under 13,000 sq ft.

“Singapore has possibly been the most exciting market in APAC for the flexible workspace sector. There has been expansion from local operators, with JustCo and The Great Room grabbing headlines, while we have also seen mainland Chinese operators enter the market, and, of course, WeWork with the acquisition of Spacemob,” said Duncan White, executive director at Colliers.

Major market activity in the flexible workspace sector also included The Working Capitol continuing its expansion with a 60,000 sq ft deal at Mapletree Business City and The Great Room, expanding to a whole floor at One George Street and subsequently securing a new site consisting two floors of Centennial Tower (approx. 38,000 sq ft).

Mainland Chinese operator Ucommune entered the Singapore CBD with a modest take-up of space, while the biggest deal of 2017 was a 62,000 sq ft market entry in Republic Plaza in a partnership with landlord CDL. JustCo followed closely behind with 60,000 sq ft acquisition of space at Marina Square.

There was some minor turbulence in the market with Lattice80 exiting its Robinson Road location and the on-off proposed merger between nakedHub and JustCo eventually resulting in the two operators going their separate ways.

White noted that further M&A activities can also bolster the growth of flexible workspaces in 2018. WeWork’s acquisition of Spacemob in 2017 was just the beginning which gave birth to its Beach Centre space, and with 71 Robinson Road slated to open in 2018.

“2018 promises to be another exciting year, though both local and international operators will need to look harder for space given most Grade A buildings already have operators in situ that have secured exclusivity clauses. We expect to see some assets being repositioned, such as retail podiums and Grade B office buildings, to accommodate the growth, but also to harness the continuously evolving needs of occupiers,” he said.

According to the report, interest in workspace operators is rising as their take-up of office workspaces is expected to reach 550,000 sqft in 2018 (3.9%), up from 464,000 sqft (2.4%) in 2017.

Overall, there are currently 113 workspace centres with an average desk cost of US$648 a month. The average rent for grade A offices is US$74 psf per annum. Colliers expects these figures to grow further in 2018.

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