GURUGRAM, India, May 7, 2019 /PRNewswire/ —
Asian CBD areas have historically been dominated by finance. However, technology, media and telecoms (TMT) groups and flexible workspace operators were key drivers of demand over 2017-2018. TMT groups now occupy about 18% of prime office space in Asian CBDs, and flexible workspace 4-5%. Growth in TMT and flexible workspace may slow, but is unlikely to reverse. Conversely, finance is generally flat or in slight decline. In addition to changing occupation profiles, patterns of workplace organization and design are evolving. Occupiers in general increasingly value flexibility, efficiency of space use and ambient experience.
“Not only are occupier profiles changing, but so too are patterns of workplace organization and design. Offices are increasingly laid out on open-plan activity-based or agile working principles, while occupiers in general are demanding flexibility, efficiency of space use and enhanced ambient experience as tools to staff retention for a more mobile and younger workforce,“ said Ritesh Sachdev, Senior Executive Director, Occupier Services at Colliers International India.
Finance and professional services have traditionally been the dominant occupier sectors in the CBDs of major Asian cities. Finance alone still represents 30-50% of total occupation of prime office space in most Asian CBD areas outside India and the Philippines where technology is more important. However, patterns of space occupation are changing, with the technology, media and telecoms (TMT) and flexible workspace sectors the key drivers of new demand in many cities over 2017 and 2018. Technology and media has thus emerged as a major occupier sector. This was already true in the major Indian cities, where the TMT sector accounted for between about 19% of Grade A office space in Mumbai and 48% in Bengaluru at end-2018, and in Manila, where the proportion was 37%.
It is also seen that flexible workspace (referring to co–working and serviced offices) still represents only 4-5% of aggregate occupancy of Grade A office space in Asia. However, the proportion would probably be higher if Grade B space were included, since flexible workspace has proven a valuable tool for revitalizing Grade B office buildings in Hong Kong among other markets. Overall, flexible workspace continues to expand across Asia. While classic co-working spaces served freelancers, entrepreneurs, remote workers and start-up companies, increasingly flexible workspace groups are providing an additional temporary space solution to large corporate enterprises.
Flexible workspace operators have made particular inroads into Indian urban markets. As per Colliers Research, the sector accounts for 15% of total Grade A office space in prime areas of Bengaluru, and for at least 6% in the NCR agglomeration.
The flexible workspace is now fully established as an occupier sector, serving an important market niche. While growth rates in the sector may slow from now on, the trends are not expected to go into reverse. There has been particular growth potential at the premium-end of the flexible workspace market, especially for those operators focusing on provision of amenities and hospitality-related services.
About Colliers International Group Inc.
Colliers International (NASDAQ, TSX: CIGI) is a leading global real estate services and investment management company. With operations in 68 countries, our 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, our experienced leadership team, owning more than 40% of our equity, have delivered industry-leading investment returns for shareholders. In 2018, corporate revenues were $2.8 billion ($3.3 billion including affiliates), with more than $26 billion of assets under management.
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