Apac Flexible Office Space Hits 89 Mil Sq Ft Cbre
In the first half of 2024, the Asia Pacific (Apac) flexible office market saw continued growth, even as the rates of expansion have stabilized in recent years following the impact of the pandemic. According to a recent report published by CBRE, as of June 2024, the total flexible office stock across 20 major Apac markets stood at 89 million sq ft, which was 3.9% higher than the stock in December 2023.
The flexible office market now makes up approximately 4% of the total Apac office stock and 3.2% of the total Grade-A office stock in 1H2024. Across the region, there are an estimated 3,000 flexible space centres currently operating.
CBRE notes that the increase in flexible office stock points to a steady growth in the market in recent months. However, compared to the pre-pandemic years, the overall growth remains significantly lower. From 2020 to 1H2024, the annualized growth rate for the flexible office market was only 4%, a far cry from the 51% annualized growth rate recorded between 2015 and 2019. CBRE states that the Apac flexible office space market is now entering a period of normalized expansion, in contrast to the boom years before the pandemic.
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Singapore has some of the highest penetration rates for flexible offices in Apac. As of 1H2024, flexible office space accounted for approximately 4 million sq ft in Singapore, which represents 5.4% of the total office stock and 5.1% of the Grade-A office stock.
The recent growth in the Apac flexible office market has been primarily driven by Indian cities. In Delhi, flexible office space makes up 10.7 million sq ft, or 6.8% of the Grade-A office space. In Bangalore, it accounts for 15.5 million sq ft, or 6.9% of the Grade-A office space.
On the other hand, cities in mainland China have experienced a decrease in flexible office space penetration, as operators in the market have consolidated. In Beijing, Guangzhou, and Shenzhen, the penetration rates have fallen below 2% in the Grade-A office market as of 1H2024.
CBRE notes that flexible office space operators have shifted their business strategies in the wake of the pandemic. Their focus now is on income diversification, turnkey-managed solutions, and maximizing center utilization. Additionally, many operators are exploring alternative deal structures, such as management and capital expenditure contributions by landlords, to create more sustainable business models.