How Flexible Office Space is Helping Australian Companies Stay Agile
The number of flexible workspaces is growing exponentially in Australia with a 15% increase in new serviced offices and co-working spaces opening in the last year alone.
But compared to other major international destinations for business Australia only has 300 such offices in total compared to more than 3,000 in the US and UK alone.
During the relative economic uncertainty of the past year – with growth limited to 2.5% – Australia is now witnessing the growth of a “contingent workforce”, as has been seen in the other mature business markets since 2008.
Small businesses of four employees or less make up more than ¾ of the total market and the agility offered by flexible workspace is gaining in appeal, particularly while the rapid growth of the past few years is inhibited.
According to our data based on more than 3000 transactions in the region in the past year alone, Instant Offices saw a 17% growth in demand for flexible office space in Australia during the second half of 2015 alone.
Australia’s Changing Economy
The growth of big-name tech companies in Australia is also a key indicator that flexibility in the procurement of business space will become a burgeoning trend. The names of Twitter, Apple, Amazon and Atlassian are starting to become buzz words in the property world.
These companies are taking significant amounts of space in the leading Australian property markets but as in the UK and US, firms operating in the TMT (Technology, Media and Telecommunications) sector are well versed in taking flexible workspace and aim to maintain agility in their property portfolio.
Sydney has been synonymous with the financial services sector for some time and in this market, swathes of space had been taken to cover headcount growth. But TMT firms take a different approach to growth – in part because of their reluctance to expose themselves to risk by taking on too much space in new markets but also to encourage collaboration and flexibility among their teams.
The Benefits of Flexible Space
- Flexible workspace carries various benefits for corporates and SMEs. A fixed monthly cost facilitates cost planning for the medium term with no hidden charges or unexpected costs.
- For companies that experience rapid growth, they can buy more space with relative ease and quickly, if necessary. Furthermore, if a period of retrenchment if required, then the amount of space can be reduced accordingly.
- The choice of a short-term contract means that a business can choose to occupy space right next to a new client or place a project team near to targets for business growth.
The Rise of New Trends in Australia
In two of the country’s commercial markets, Sydney and Melbourne, the typical entrance to the market has been via fixed lease of seven to 10 years in length. For many start-ups and SMEs, it is virtually impossible to plan this far in advance and to accurately anticipate business growth over this timeframe.
Statistics from the Australian Bureau of Statistics show that with the large proliferation of small businesses, the office market would benefit from providing more flexible workspace solutions, which align with their requirements.
In June 2014
- 61% of actively trading businesses in Australia had no employees
- 27% had 1-4
- 10% had 5-19
- 2% had 20-199
- Less than 1% had 200 or more
In 2013-14
- Business entry rates were highest for businesses with annual turnover of between $50,000 and $199,999 and lowest for businesses with annual turnover of $2 million or more.
In 2013-14
- Business exit rates were highest for businesses with annual turnover under $50,000 and lowest for businesses with annual turnover of $2 million or more.
With 97% of companies having up to 19 employees, and with exits and entries for businesses with lower revenue, the need for flexible options is obvious, and a turn towards flexibility could allow many of Australia’s companies to grow and develop, where they weren’t able to before.
Sean Lynch, Managing Director at Instant Asia-Pacific, said: “We have seen in other established markets that the number of SMEs is growing and that they are occupying office space in a very different way. They want to collaborate, and interact with other businesses to generate ideas and new business. And many large tech firms also mimic this behaviour.
“It is the dual trends of collaboration in the workplace, and also the need for business to be more agile, that are driving a change in the way that business space is being procured. This is borne out the growth in co-working around the world and this is a trend that is really starting to pick up in Australia. Start-ups and new entrants to the market do not want to commit to long-term leases as it is impossible to predict growth for the medium to long term in this market. They want to occupy the best spaces in the country’s cities – offices that attract and retain employees – but do so on their terms and without the need to sign a long term lease.”
How Flexible Office Space Lowers Overheads
Flexible, or serviced, office space helps to reduce companies’ overheads by offering them a cost-effective solution that fits their business. They offer start-ups a ready-to-go space with full office management. This means that new companies can avoid up-front costs associated with launching a business such as internet connections, computers or furniture. An all-inclusive cost means easy budgeting, and with no long-term IT, telephone or broadband contracts, you can avoid being stuck with additional costs you may not need down the line.
In general, serviced office space is cheaper than traditional office space because it is designed to fill your needs. If you’re a company that never sees clients and doesn’t have many visitors, there’s no need to fork out the cost to get a prestigious bay side address fully equipped with marble arches and gold toilets. By focusing on the aspects of an office that will keep your business growing and thriving, you are able to spend what you can, for what you need. Many flexible office spaces also offer additional pay-as-you-go services on demand so that you don’t have to pay for services or facilities that you aren’t using at the time.
Are you looking for flexible workspace to suit your company? Browse office space in Australia or contact one of our specialist agents who will be happy to help.