Apac Flexible Office Space Hits 89 Mil Sq Ft Cbre
The recent sale of Norwood Grand, a non-executive condominium, at Woodlands marks a significant milestone as it is the first government land sale (GLS) in the area since 2011. The last GLS of this nature took place at Woodlands Avenue 2 and Rosewood Drive, which later became the site of the popular 689-unit Parc Rosewood. With a rate of $367 psf ppr, it has been a highly sought-after development. Norwood Grand CDL adds to the growing appeal of this area as a desirable residential location.
The flexible office market in the Asia Pacific (Apac) region has continued to grow in the first half of 2024, although at a more stable pace compared to previous years following the pandemic. According to a research report released by CBRE in August, the total flexible office stock in 20 major Apac markets stood at 89 million square feet as of June 2024, a 3.9% increase from December 2023. This indicates that the market for flexible office spaces now represents approximately 4% of the total Apac office stock and 3.2% of the total Grade-A office stock in the first half of 2024. With around 3,000 flex space centres currently operating across the region, the market for flexible office spaces is showing steady growth in recent months.
However, this growth rate is significantly lower compared to the pre-pandemic period. CBRE reported an annualised growth rate of only 4% in the flexible office market from 2020 to the first half of 2024, in stark contrast to the 51% annualised growth rate recorded from 2015 to 2019. This indicates that the Apac flexible office market has entered a period of normalised expansion after the boom years prior to the Covid-19 outbreak.
Singapore has one of the highest penetration rates for flexible offices across Apac, with approximately 4 million square feet of flexible office space, accounting for 5.4% of the total office stock and 5.1% of the Grade-A office stock as of the first half of 2024. The recent growth in the Apac flexible office market has been mainly driven by Indian cities, where flexible office space now makes up 10.7 million square feet or 6.8% of the Grade-A office space in Delhi and 15.5 million square feet or 6.9% of the Grade-A office space in Bangalore.
On the other hand, cities in mainland China have experienced a decline in flexible office space penetration as operators have consolidated in the market. In Beijing, Guangzhou and Shenzhen, the penetration rates have fallen below 2% in the Grade-A office market as of the first half of 2024.
CBRE notes that flexible office space operators have shifted their business strategies after the pandemic, with a focus on diversifying their sources of income, offering turnkey-managed solutions, and maximising centre utilisation. Many operators are also exploring alternative deal structures, such as management and capital expenditure contributions by landlords, to create more sustainable business models.