05/07/2019 - 11:03

Momentum builds for flexible spaces

05/07/2019 - 11:03

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Flexible office providers are continuing to make their presence felt in Perth’s office market.

Momentum builds for flexible spaces
Spaces Wentworth has been designed to provide a seamless transition between the old and new buildings at Raine Square. Photo: Gabriel Oliveira

Flexible office providers are continuing to make their presence felt in Perth’s office market.

Global flexible office operators are increasing their footprint in Perth, as building owners respond to large tenants increasingly seeking shorter lease terms and more optionality in office accommodation.

And with increased competition, further downwards pressure is expected on co-working rents, which fell by 12 per cent in 2017-18 to $596 per month in Perth, according to research by commercial property analytics group Office Hub.

The latest to land in Perth is Spaces, a division of Regus’s parent company IWG, taking the number of co-working or flexible office facilities in Perth past 20.

Spaces will inhabit 3,000 square metres of space at Charter Hall’s newly redeveloped Raine Square precinct, taking up part of the new ‘glass box’ office building as well as a portion of the heritage-listed Wentworth Building.

IWG Australia country head Damien Sheehan said the Spaces Wentworth facility, set to open in late July, was being developed in response to market demand.

“There are a number of landlords that knew early on that they wanted to have this offering in their buildings and precincts, and some landlords are now actually developing their own co-working brands within their broader portfolio offering,” Mr Sheehan told Business News.

“The benefit for the landlord is that it helps attract other occupiers to the building; they can say to an occupier ‘we have Spaces within our building’ so they may not have to take 5,000sqm, they may take 4,000sqm and flex-up and down within Spaces’ product offering.”

Mr Sheehan said building tenants were also driving demand, particularly in the case of large national or international firms.

“They want to give their employees the same offering across the country,” he said.

“One clear advantage that we do try and leverage is our national and global footprint to offer that brand to our customers all over, rather than just one location.

“For a business owner, it’s also terrific for talent acquisition and retention.

“We have been shortlisted by a Fortune 500 organisation that primarily wants to use the Spaces brand for talent acquisition and retention for a large project they are rolling out, because they want to attract millenials who like to be in a lifestyle precinct.”

Mr Sheehan said the fascinating thing about companies taking up space in a co-working facility was that interest was no longer restricted to technology companies or startups. However, motivations for signing on to a deal at somewhere like Spaces were quite divergent among different businesses.

“It depends on who is making the decision in the customer organisation,” he said.

“If it’s your chief financial officer, sometimes it is cost cutting, if it’s around culture it is quite often human resources or head of people strategy.

“It often depends on who is making that decision as to why they want to be in that location.”

Mr Sheehan said he did not expect the momentum to slow in Perth’s serviced office space, with Spaces itself evaluating two additional facilities in the central city.

The Spaces rollout coincides with international operator WeWork unveiling its second Perth facility, with a 3,000sqm tenancy at Warrington Property’s William Square to complement its near-8,000sqm presence in the city’s tallest tower, Central Park.

The international firms are landing in a market that’s traditionally been well held by local groups Liberty Executive Offices and Spacecubed – both of which have expanded significantly in recent years.

Mr Sheehan said he expected a fiercely competitive co-working and flexible offices market in coming years.

“The market is clearly turning in Perth, so I think the timing is good,” he said.

“The competition is really good for business, it absolutely keeps you focused on your service offering.

“At the end of the day, the industry broadly is all offering a similar product, but it’s how we activate that space and how we engage our customers and provide a unique experience that represents the Spaces brand.

“Ultimately the feedback that we get is that Spaces provides a terrific culture for businesses and individuals to establish themselves and provides an x-factor to employees in the areas of engagement and stimulation.”

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