Apac Flexible Office Space Hits 89 Mil Sq Ft Cbre
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The first half of 2024 saw continued growth in the Asia Pacific (Apac) flexible office market, although growth rates have moderated in recent years following the pandemic. According to a new research report released by CBRE in August, flexible office stock in 20 major Apac markets reached 89 million square feet as of June 2024, a 3.9% increase from December 2023.
Currently, flexible office space makes up approximately 4% of total office stock and 3.2% of Grade-A office stock in the Apac region. The research report also found that there are around 3,000 flex space centres open in the region. CBRE notes that while this increase in flexible office stock indicates steady growth in the market, the overall growth remains significantly lower compared to pre-pandemic levels. The annualised growth rate for flexible office space from 2020 to 1H2024 was only 4%, a stark difference from the 51% growth rate seen from 2015 to 2019. According to CBRE, this signals that the Apac flexible office market has now entered a phase of more stable expansion compared to the boom years before Covid-19.
In terms of penetration rates, Singapore has one of the highest for flexible offices in the Apac region. As of 1H2024, flexible office space accounted for approximately 4 million square feet in Singapore, making up 5.4% of total office stock and 5.1% of Grade-A office stock.
The research report also highlighted that recent growth in the Apac flexible office market has been mainly driven by Indian cities. In Delhi, flexible office space accounts for 10.7 million square feet or 6.8% of Grade-A office space, while in Bangalore it makes up 15.5 million square feet or 6.9% of Grade-A office space.
On the other hand, cities in mainland China have seen a decline in flexible office space penetration as operators in the market consolidate. As of 1H2024, Beijing, Guangzhou, and Shenzhen have all recorded penetration rates below 2% in the Grade-A office market.
CBRE also notes that flexible office space operators have shifted their business strategies in the post-pandemic era. Their priorities now include diversifying their income streams, offering turnkey-managed solutions, and maximizing centre utilization. Many operators are also exploring alternative deal structures, such as having landlords contribute to management and capital expenditure, in order to create more sustainable business models.