With larger numbers of corporate clients now utilising ‘flex’ to support their agile office needs, new research shows a 16% uptick in demand for flexible workspaces across the Asia Pacific (APAC) in the first half of 2023 compared to the second half of 2022, but the outlook isn’t great.
Data from the Instant Group commissioned 2023 APAC Flexible Market Review reveals that recovery in APAC is slower than the UK and the EMEA – up 18% and 24% respectively.
Compiled using Instant Group’s proprietary data, the report reveals a flatlining of the average transaction size across APAC during the first half of 2023 at 9.6 desks compared to the second half of 2022.
However, over a longer measure, it has increased by 130% compared to the first half of 2019 when it was at 4.5 desks.
Other noteworthy highlights within the report include:
- Transactions for 1-2 desks across APAC have reduced from 15% of total flex desks in 2019 to 5% in 2023.
- Transactions for 25-plus desks have increased from 24% of total flex desks occupied in 2019 to 42% in 2023.
- Contract lengths for flex space have increased by 5%, from 10.2 months in the second half of 2022 to 10.7 months in the first half of 2023 – yet still down on where they were during the first half of 2019, by 7% (11.5 months).
While companies are taking on flex as an agile workspace solution, Sean Lynch, Managing Director at The Instant Group is witnessing reluctance by companies within the APAC region to commit for long periods of time due to ongoing economic uncertainties.
“While we have seen demand decrease year on year in Australia, this can be explained by a demand correction taking place – something that many markets across the APAC region are experiencing,” said Lynch.
“We are still seeing strong interest in flex with the number of enquiries decreasing but the quality remaining high, with many businesses converting into the uptake of office space.”
Forecasts are falling
According to the report, major cities including Brisbane, Sydney and Melbourne all forecast to experience a decline in demand in 2023 compared to 2022, down 38%, 15% and 15% respectively.
The 2023 demand forecast compared to pre-pandemic levels for all three cities is also predicted to be down, by 45% in Sydney, 31% in Melbourne and 26% in Brisbane.
These falls, the report suggests, reflect time being spent on workplace strategies that optimise solutions for their employees that incorporate serviced offices into their portfolios.
Unsurprisingly, given the declining demand, across Australia new stock of flexible workspaces coming onto the market has been flat with Brisbane, Sydney and Melbourne, experiencing between zero and 3% growth.
