Downtown office space is more expensive than ever. Technology is enabling workers to put in hours anywhere, anytime and firms want to be able to scale up and down quickly.
With such huge changes afoot to how we work, the hunt is on - and has been for some time - to find a new way to "do" office space.
Leased offices have long been the norm, but the practice of renting flexible workspace is fast becoming the rule, not the exception.
The likes of co-working venues and pay-by-the-hour meeting rooms are not just a boon for smaller companies looking to start out: The flexible workspace revolution has captured the interest of both multinational corporations and landlords, who see the many benefits of an attractive, fully furnished and managed office environment.
In Asia-Pacific, Colliers found that the total space occupied by flexible workspace operators in 2018 rose by 35 per cent in Hong Kong and over 40 per cent in Shanghai. Operators tripled their footprint between 2015 and 2018 in Singapore.
Here's why the future is bright for serviced offices and why it pays to sign up for them:
It's the way of the future
Serviced offices are keeping up with how the way of work is changing. With remote work gaining steam and the war for talent getting heated, companies want to allow workers the freedom to decide where they want to work.
Signing up for an operator with a large network of flexible space gives companies the ability to accommodate employees' lifestyles and increase productivity by cutting down on lengthy commutes.
In the age of disruption, firms are constantly revising their business plans to expand. The traditional long lease may be too long a commitment for them to remain nimble. Recent changes to the International Financial Reporting Standards (IFRS) have also made long leases less desirable for companies.
Serviced offices allow firms big and small to add or reduce on flexible terms depending on their current needs and future requirements, all without set-up costs, capital investment and property management expenses.
It's not just startups and small firms that are signing up. With large corporates on the hunt for more agile and more flexible lease terms, big names like Adidas and Facebook drove some of the biggest flexible working deals in New York in 2018.
It spells new opportunity for landlords
With prime office rents getting sky-high and decentralisation gaining steam in major urban areas including Singapore, firms are looking outside the city centre for flexible space to save costs and also position offices closer to where people live.
That means that building owners have an opportunity to net tenants once inaccessible to them if their real estate is located in areas not historically deemed prime.
Firms are also starting to look at decentralised areas and second-tier cities to avoid the sky-high rent of a downtown office - the supply of serviced flexible working spaces in Oklahoma and Kansas has grown by 20 per cent in the last year in direct response to this trend.
It adds vibrancy to buildings
With one swoop, a landlord that nets a serviced office provider also reels in the operator's diverse suite of tenants, all the way from startups to corporates.
With Instagrammable collaboration spaces like meeting spaces, business lounges and co-working zones, serviced offices will continue to be a magnet for firms to sign up.
Having a serviced office on premises can drive even more demand for space in the building overall. After all, those tenants signing traditional leases would have the option of signing onto the building's flex space.
That means these firms would be less likely to move out or break their terms. In the long term, that spells better stability, cash flow and valuation for building owners.
Learn more about how IWG can deliver your firm the freedom to grow, minimise hassle in the process and bring value to your building here.