Auckland is increasingly a hot spot for the growth of flexible offices including co-working and serviced space, says Mark Grant, head of markets for JLL New Zealand.

Commenting on the release of a new JLL report entitled Spotting the Opportunities: Flexible Space in Asia Pacific, Grant says the demand for co-working office accommodation is growing faster in the Asia Pacific region than anywhere else in the world.

"The report shows the region's stock of flexible floor space is growing at 35.7 per cent per year compared to 25.7 per cent in the US and 21.6 per cent in Europe.

"Our research analysed major co-working and serviced office operators in 12 Asia-Pacific markets including Auckland," Grant says. "It reveals that the number of major flexible space operators doubled between 2014 and 2017; while flexible floor space has increased by 150 per cent.

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"By 2030, flexible work spaces could comprise 30 per cent of corporate commercial property portfolios worldwide."

Tom Barclay, JLL New Zealand's head of research, says the agency is currently tracking 45,000sq m of operational flexible space and another 10,000sq m in the development pipeline.

"We expect to see continued growth in flexible space. It is particularly suited to the New Zealand SME culture and this is underscored by the fact that many global companies have only a small presence in New Zealand, so having flexible or serviced office space makes sense from an operational and financial perspective.

"Demand is also coming from new companies looking to set up in New Zealand and requiring a 'soft entry' via flexible space as well as from more established corporates who are 'right-sizing' their businesses.

"Less experienced operators are now creating environments and communities that extol the benefits of co-working such as innovation and collaboration. These smaller operators are also the ones subject to takeovers from larger industry players," Barclay says.

Co-working space is a feature of the new B:Hive office complex at Smales Farm on Auckland's North Shore. Photo / Supplied
Co-working space is a feature of the new B:Hive office complex at Smales Farm on Auckland's North Shore. Photo / Supplied

In relation to the implications of co-working and shared spaced on real estate investors, Barclay says landlords will need to continue to form joint ventures with co-working operators or create their own flexible space offerings to meet the needs of tenants.

"Developers are adapting to what could be a new standard in property development whereby flexible workspace will be an amenity as essential in a commercial building as food and beverage outlets or a gym" he concludes.

Grant says corporate adoption of flexible space is still in its early days, but there are certain factors that will continue to increase the demand for co-working and serviced office facilities.

"The report identifies 'plug-and-play' simplicity as a factor in the growth in corporate demand. This is the ability to move in and out of an office at short notice which avoids complicated contract leasing negotiations and undertaking fit-out work.

"At the same time, businesses are looking to encourage collaboration among employees and are using shared workspaces to foster innovation through exposure to new ideas and ways of working."

Ben Dalton, head of project and development services for JLL New Zealand, says some companies have started their own internal co-working facilities, or have incorporated features of flexible space into existing offices to make the work environment more engaging.

"This helps to build a community feel and can be a differentiator when it comes to attracting and retaining young talent," he says.

Dalton says there remain some barriers to the widespread use of flexible space. "Large corporates place a high value on retaining their brand identity and culture as well as the need to protect data and secure their IT infrastructures."