Australian Coworking Market On The Brink Of Major Change

Grant Philipp
Grant Phillipp, CEO and founder at Office Hub, shares why the Australian coworking market supply has met the demand for the first time
  • Rates in Australia drop as tenants enjoy more choice
  • More corporates are attracted to coworking spaces in Australia
  • Office Hub predicts number of flexible office spaces in Australia to double by 2021

The Australian coworking market has entered a new phase where supply has met demand for the first time, according to a recent report.

The Australian Coworking Report 2017/18 from Office Hub reveals a slow but steady market with a 25% increase in the number of listed workspaces and a 3% increase in businesses moving to flexible office space.

One-fifth of coworking firms are now major corporations in Australia. However, the change in price per desk compared to the previous year has dropped in every major city apart from the nation’s capital – Canberra.

We spoke to Grant Philipp, CEO and founder at Office Hub, to find out more about the Australian coworking market and the report.

Allwork.Space: How do you think the Australian coworking market differs from other countries?

Grant Philipp: Over the past 12 months, coworking has changed shape globally as traditional serviced office providers rebadge themselves as “coworking spaces”. The look, feel and offerings all over the world are morphing from the bean bags and table tennis days to high end offerings and customisations traditionally linked to a corporate fitout. Everyone is building boxes to house the teams instead of just offering open plan, and bespoke spaces are being developed to attract the fastidious requirements of the new breed of coworker. Right now the level of detail, size of investment and creativeness in unique offerings is still lacking in Australia. This is a speed bump on the road of coworking progress. The indicators show that the deep pockets of Asia are coming and they have some grand expansion plans in the land down under.

Allwork.Space: How and why do you think Australia stands out in the coworking industry?

The lack of quality creative space in Australia has left the average coworker shortchanged in offerings and complacent in exploring the options – they’ve been taking what they can get. Compare this to the feature-packed global coworking community and you can see that we in Australia are sadly playing catch-up as overseas competition has fuelled a long list of “must-haves” and providers must either step up or step out to survive in Asia and other hot markets. The good news is that this is changing in Australia as the demanding needs of the new breed of coworker are driving bigger and better spaces and foreign investments are spending big on unique offerings and community engagement.

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    Allwork.Space: Are there any stats or trends this research revealed that surprised you?

    The biggest surprise for us was the trend of bigger and more corporate businesses moving towards flexible workspaces. Our primary customer base has always been small businesses and startups but this year saw more representation than ever from the big guns like corporates and enterprises. The average size of a rented workspace grew by more than one workspace and there was a huge 105% lift in enquiries for 15+ people. More large businesses are considering flexible workspaces as a viable option and this will translate into bigger rentals throughout the market in the next year.

    Allwork.Space: The stats on the change in price per desk shows a percentage decrease for every city apart from Canberra – why do you think this is?

    The flexible model is still in its infancy in Canberra whereas other markets, particularly Melbourne and Sydney, are more mature. They’ve weathered huge demand for the past few years with limited supply, which caused prices to rise. Then, this year new operators came into the game and lifted supply, bringing rates back down in their first real period of consolidation.

    Canberra, on the other hand, lags behind in growth and there are only a handful of flexible operators – when demand exceeds availability, prices will always be forced upwards. However the Canberra figure is also reflective of a general preference for more expensive private desks over open plan. The high proportion of government and public sector organisations mean that tenant demand is focused on the more expensive private workspaces over affordable open plan desks. Additionally, in younger coworking markets like Canberra tenants tend to prefer serviced and private offices as they are looking for a private alternative to a commercial lease rather than a more creative and collaborative coworking option.

    Allwork.Space: How do you see the coworking market developing over the next 12 months in Australia?

    The biggest development in the market over the next 12 months will be the much anticipated arrival of the big global providers. There is huge potential for growth as the Australian market is still young – there is something like three times the number of flexible offices in Central London than there are in all of Australia to put things into perspective.

    In fact, we expect the number of flexible office spaces in Australia’s cities to double by 2021 as global providers identify growth potential, property owners mix their portfolio to include flexible workspaces and the new breed of coworkers continue to demand more flexible solutions that support our embedded Aussie focus on work/life balance.

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