Instant’s Patty Vozzo, US Corporate Solutions Director, recently attended the 27th Annual Educational Conference, hosted by the Global Workspace Association in Atlanta. Her presentation, entitled “The Macro View: The Future Began Yesterday”, revealed some interesting insights into the growth of the executive suite market, also known as serviced offices, over the past two years.
A closer look at emerging markets
Typically, the phrase “emerging markets” refers to a country with an industry or economy that is rapidly growing and advancing – most of these places fall under the category of “developing” nations. Emerging markets are an attractive prospect for investors due to their fast growth.
China
According to Instant’s Head of Portfolio Services, Branton Moore, China is the country to watch when it comes to future growth in the serviced office and executive suite market. With their continued economic growth and development, the country is a popular solution for multinational corporations requiring regional headquarters. Indeed, any business with a global focus will likely have China on their radar – whether it be for the production of goods or as a vast new market to sell into. To do business in China, many companies need to have a physical presence in the country. The process of setting up a new business in China can be challenging, and serviced offices can remove some of the complexity of leasing and fitting out conventional office space – ideal for newcomers in the region. As a result, Instant have seen, and expect to see continued growth of the serviced office sector throughout the China.
Africa
Africa is another region to keep an eye on over the next few years. Apart from South Africa, the concept of serviced offices is still a relatively new idea. However, it is slowly starting to catch on in cities across the continent, and serviced office operators are increasing their presence in the region. According to Branton, most of the recent growth has occurred in Sub-Saharan Africa. Lagos, Accra and Nairobi have recently increased the number of serviced office centres, while Kampala, Kigali and Lusaka are just beginning to see serviced offices opening. New centres are opening across Sub-Saharan Africa every month.
South America
A market with great potential is South America. Currently, the region is dominated by one main serviced office provider, which means that competition is limited. As such, the concept has yet to catch on and many businesses stick to traditional, leased, property solutions. The service office market in South America can take off, however, if other serviced office providers begin operating in the region. This has happened in Mexico; initially, the country was dominated by one service provider, but then a number of local providers began offering ready-to-go offices in the area, which lead to increased competition and rates that were achievable and realistic for the local market. Serviced offices in South America can be found in cities such as Sao Paulo, Lima and Rio de Janeiro.
Let’s take a look at some key facts
- In the past two years, from July 2011 to July 2013, 124 new office centres were added to Instant’s portfolio, a growth of 21% leading to a combined total of 714 commercial office developments located in emerging markets. More specifically, this office space growth occurred in 101 cities, in 59 countries around the world.
- It is calculated that the serviced office market will double in growth in the next 5 years. Across the various regions, growth in the past 2 years has been as follows: Latin America – 38%, Europe and the Middle East – 10%, Africa – 19% and Asia – 22%.
Further Reading
Earlier this year, Instant published “Emerging Markets Serviced Office Review 2013”. The report provides a comprehensive review of the serviced office sector in the world’s emerging markets, and also provides greater insight for international corporations looking to set up offices in such locations. Download the report to read more about growth in the flexible office industry.
