SINGAPORE (Common Wealth) _ According to a CBRE sector analysis, the total volume of flexible office workspace in the Asia Pacific area reached 87 million sq ft in March, a 6% rise from September 2022.
By the end of 1Q2023, flex office spaces had penetrated approximately 4% of total regional office supply. Meanwhile, the share of flex spaces in Grade A office stock increased, growing from 3.1% in the third quarter of 2022 to 3.5% in the first quarter of 2023. According to CBRE, this increase reflects strong demand from flex space owners looking to upgrade their centers to more Grade A buildings. Technology businesses (35%), business services (16%), and finance-related industries (12%), are the top three tenants of flex office space in the region.
In Singapore, the amount of flex office penetration in the entire office market is approximately 5.4%, resulting in a total volume of approximately 4 million square feet in the city-state. According to CBRE, persistent economic uncertainty is increasing the significance of portfolio flexibility and causing a greater emphasis on cost management, which is driving occupier demand for flex space.
According to a poll of regional occupiers, more than half believe that the proportion of flexible office space in their portfolios is under-allocated, and they expect to increase their usage of it in the coming months.
According to CBRE, tech businesses will continue to be the region’s leading flex office space occupiers this year. Meanwhile, concerns about capital expenditures are pushing a preference for dedicated workstations. Event venues and office access passes are also in high demand. This year, on-demand workstation (pay per usage) solutions are also likely to grow.
Meanwhile, according to data provided by global real estate consulting firm JLL, commercial real estate investment activity in Asia Pacific (Apac) totaled US$27 billion ($36 billion) in 1Q2023. This indicates a 30% year-on-year decrease compared to 1Q2022.
According to JLL, the drop in investment volume is due to interest rate headwinds as well as asset price adjustments. “The market remains challenging, with many investors believing that tightening lending standards will create additional uncertainty for the commercial real estate market,” says Stuart Crow, JLL’s CEO, capital markets, Asia Pacific.
The majority of the area had reduced volumes, notably Singapore, which saw a 66.8% year-on-year drop to US$1.9 billion. South Korea witnessed a 69.5% year-on-year reduction to US$2.5 billion, China saw a 16.4% year-on-year drop to US$6.9 billion, and Australia saw a 25.6% year-on-year drop to just under US$6 billion.
