Guest blog by Sidharth Dhawan and Brandon Forde, CBRE

This article originally appeared in CBRE’s Agile Real Estate Knowledge Hub

With the flexible space sector occupying just 2% of total Grade A office stock in Asia Pacific, there is still considerable room for growth. However, in recent months, CBRE has observed many providers adopting a more measured pace of expansion, due to shifting business sentiment and mounting competition between providers. These factors will drive the implementation of more sophisticated and nuanced strategies designed to improve occupancy and ensure operational profitability, especially on a per-center basis. Here are four trends to watch.

Customized Enterprise Solutions
Although many large corporates have utilized flexible space for some time, providers have shifted from offering these occupiers memberships or seats in co-working centers to customized enterprise products, including managing and operating co-working spaces created in-house by large multinationals.

Partnering with Landlords
Many landlords now seek to provide flexible space as part of a broader amenity offering to tenants, not only by leasing space to flexible space operators but also by offering fit-out subsidies, entering into revenue-sharing agreements and permitting third-party providers to operate building amenities.

Targeting Specific Niche Segments
There are considerable opportunities for flexible space providers to cater to specific niches, functions and industries. One such example is Campfire’s facility in Wong Chuk Hang, Hong Kong, which serves creative industries, including fashion, design and media, by providing photography studios, sound recording rooms, and more. Other flexible space providers, including IWG, which recently announced plans to open its first location for its No18 brand, are creating high-end business clubs to provide members upscale places to conduct meetings and entertain clients. Large financial institutions are also housing fintech teams in specifically configured and secured flexible workspaces.

Brandon Forde
Sidharth Dhawan

More Prudent Site Selection
While flexible space operators have previously favored Grade A buildings in prime central business districts, they are now more frequently considering Grade A- and Grade B buildings, which can provide a rental cushion for sustainable operations, moving forward. Providers will also increasingly utilize creative options like shopping malls and hotel business centers.