World’s largest companies to shift focus towards flexible workspace

Published on 2018-12-06

69% of corporates plan to increase flexible workspace over the next 3 years
44% believe flexible workspace will comprise up to a 5th of all corporate workspace
75% aiming to boost employee happiness and productivity through utilisation of business space

04thDecember 2018 (Guangzhou) – The demand for flexible workspace is set to accelerate as over two-thirds of global corporates plan to increase their use of flexible co-working and collaborative space over the next three years, according to (Y)OUR SPACE– a new report published by Knight Frankon workspace occupier solutions. 

The report surveys senior executives at 120 global companies which collectively employ over 3.5 million people worldwide and occupy an estimated 233 million sq ft of office space, equivalent to the total amount of office space in Central London. 

The research shows global corporates intend to operate increasingly from flexible, serviced and co-working spaces, which create a more collaborative working environment and offer the freedom to expand and contract quickly according to market conditions. 

Today, despite the proliferation of co-working and serviced office operators, most global corporates occupy office space on a traditional lease model. Two-thirds of companies surveyed by Knight Frank reported that co-working, serviced and flexible office space comprise 5% or less of their current office space. A small minority, less than 7%, said that flexible workspace exceeds a fifth of their total workspace.

However, Knight Frank’s research reveals that the proportion of flexible space within companies’ portfolios is set to increase dramatically. Over two thirds, 69%, of global corporates plan to increase their utilisation of co-working spaces, and 80% expect to grow the amount of collaborative space they use over the next three years.

Furthermore, almost half, 44%, stated that flexible space would constitute up to a fifth of all office space in the next three years. An additional 16% estimated that as much as half of their workspace globally would be flexible space within the same period.  

Nicholas Holt, Asia-Pacific Head of Research, Knight Frank, says, “Among some of the world’s fastest-growing economies, innovation and collaboration have led to a significant increase of co-working across key Asia Pacific office markets. Flexible workspace is on the rise, supplied not only by co-working operators but also by landlords and developers who are increasingly moving into the market directly themselves.

While the proportion of co-working space lies roughly between 3% and 8% of prime office stock in the major markets, the growth in this sector and the continued change in working cultures across the region means that this number is likely to increase going forward.”

Drivers for the shift towards flexible workspace 

Over half of companies (55%) identified increased flexibility as the primary driver of this change, with a significant proportion (11%) stating that the sense of community fostered among workers was the key benefit. A further 11% reported that the greater speed to become operational was the primary reason for selecting co-working or serviced office space ahead of more conventional office space.  

An overwhelming majority of respondents, 75%, stated that personal productivity linked to wellbeing and happiness would increase as they shift towards a new flexible and collaborative model of occupancy that is more in keeping with today’s business structures and working styles.  

David Ji, Director and Head of Research and Consultancy, Greater China said The co-working space concept has been thriving in mainland China in recent years. As new ways of business operation and participation keep on evolving, the notion of flexibility and shared workspace have been highly welcomed by startup companies, corporates and even conventional office tenants. Co-working spaces are now expanding rapidly in first-tier cities, including Beijing, Shanghai, Guangzhou and Shenzhen, etc. Those spaces not only provide startup businesses with ideal small and user-friendly single office units, but also a wide range of value-added services and facilities for their office clients. From our perspective, as the co-working concept continues to flourish with more people realizing the benefits of shared space, co-working space will no longer be a disruptor but a fundamental part of China’s commercial real estate market. Meanwhile, more real estate developers and international shared office operators will strategically expand their business into the co-working sector in response to the huge market demand and development potential of China’s domestic co-working space market.

Knight Frank has been expanding its presence in the real estate service market in South China for the past fifteen years. With regard to office buildings in the Guangzhou area, Tara Luo, Senior Manager of Office Service at Knight Frank Guangzhou said: "Currently, even though the market share of co-working office space in Guangzhou is not large, we are still very optimistic about its future development in the city. With growing supply of Grade-A office buildings in Guangzhou over the next two or three years, as well as increasing acceptance of flexible working, the market share of co-working office space in Guangzhou will grow very fast. We are also pleased to offer corresponding services to clients who need them in the market."

Sern Hong Yu, Vice President, Regional Head of Project Delivery at WeWork, Greater China, said "we're here to redefine productive efficiency.  At WeWork, we optimize the efficiency of space usage, as we believed that design affects people's behavior and great design could increase productivity. In fact, our London survey revealed that 80% of surveyed member companies agree that WeWork has helped them to increase their productivity. In terms of the community benefits, 44% of members value the events organized by WeWork, while 38% value working with like-minded people."

Please download report here:
https://content.knightfrank.com/research/1670/documents/en/your-space-your-space-6022.pdf

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For further information, please contact:

Eva Lee
Director
Head of Marketing & Communications, China
Tel: +86 21 6032 1741
Fax: +86 21 6032 1799
Email:eva.lee@cn.knightfrank.com 

Dolphin Wu
Senior Officer, Marketing & Communications
Tel: +86 21 6032 1772   
Fax: +86 21 6032 1799
Email:dolphin.wu@cn.knightfrank.com 

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Note to Editor:
Knight Frank LLP is a renowned independent global property consultancy. Headquartered in London, Knight Frank operates from over 523 offices, in 60 countries, across six continents. More than 18,000 professionals handle in excess of US$1.57 trillion (£1.12 trillion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. These figures include Newmark Grubb Knight Frank in the Americas, and Douglas Elliman Fine Homes in the USA. 

Knight Frank has a strong presence in the Greater China property markets, with offices in Hong Kong, Beijing, Shanghai, Guangzhou, Taipei and Macau, offering high-quality professional advice and solutions across a comprehensive portfolio of property services. For further information about the Company, please visit KnightFrank.com.cn.