1、This paper explores the latest trends in the flexible workspace Flexible Workspace Outlook Report 2023Hong KongTHE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG21 11 21 31 41 50100,000200,000300,000400,000500,000600,000700,000800,000Top five operators by square footageTop five operators by number

2、 of locationsK E Y F I N D I N G SNumber of flexible workspace operators 23Total square footage in Hong Kong(approx.)2,200,000Total Grade A office stock as of end of 2021(sq.ft.)87,833,000%of market as flexible workspace 2.5%051015201 11 21 31 41 5THE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG

3、3CentralDistrictArea(sq ft)Causeway BayWan ChaiSheung WanKowloon EastNorth Point/Quarry BayTsim Sha TsuiKowloon WestAdmiraltyOthers427,001384,752283,530258,361204,812177,539168,923149,904103,864131,26418.6%5.7%4.5%6.5%7.4%7.8%8.9%11.3%12.4%16.8%Operator market shareFlexible Workspace by district31.5

4、%12.8%11.9%11.0%7.0%25.8%IWGCompass OfficesWeWorkThe Executive CentretheDeskOthersTHE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG4Five Predictions for 202301The emergence of a managed suite product02Increasing number of non-traditional leases betweenoperators and asset owners04Occupier take-up

5、to shift further to flex03Asset owner amenity war to gather pace05Range of products continuing to evolve and expandTHE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG5F O R E W O R D -T H E D A W N O F O F F I C E 2.0The office sector has shifted and while asset owners need to adjust so too do flex

6、ible workspace operators,otherwise flexible workspace operators,who were once seen as disruptors to the office market,will themselves be disrupted.Shifting occupier profiles are leading to white space opportunities.We have seen an uptick in demand for enterprise solutions and turnkey offices.We beli

7、eve this presents an opportunity for a managed suite product,which is a product yet to become mainstream in many Asia Pacific markets.The question is:who is best placed to deliver this?Meanwhile,asset owners are aiming to placemake with holistic,integrated,hospitality-led amenity stacks to elevate t

8、he occupier experience.Is this an opportunity for a new type of operator?This is an incredibly exciting time,with occupier trends driving innovation in how the market delivers the workplace of the future.This may be the dawn of Office 2.0;at the very least,it is the dawn of Flex 2.0.At what point do

9、 we stop drawing a line between“traditional”office space and“flexible workspace”?With a proliferation of products in the office sectorthe line is becoming ever more blurred.01The emergence of a managed suite product02Increasing number of non-traditional leases betweenoperators and asset owners04Occu

10、pier take-up to shift further to flex03Asset owner amenity war to gather paceTHE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG6The reasons for this demand uptick are obvious.We remain in turbulent times,so signing traditional leases and committing capital no longer work for many occupiers.However

11、,for asset owners,deploying capital into every transaction is not a sustainable practice,both commercially and from an ESG perspective.It is not commercially viable to fund an occupiers fit-out,rip it out at the end of the lease and repeat.For a flexible workspace operator,delivering large suites is

12、 challenging and presents increased risk.Typically,larger suites carry a lower per-desk rate,while the nature of larger suites means there can be longer void periods.If a flexible workspace operator is on a traditional lease then delivering enterprise solutions can negatively impact margin to the po

13、int of it being prohibitive.This leads us to advocate for the emergence of a managed suite product.A managed suite is a fitted office,typically less than 10,000 sq.ft.,with furniture,fixtures and equipment(FF&E)and ready to move into on relatively short terms(usually 12 to 36 months).A level of cust

14、omisation is sometimes available,such as a selection of furniture and company branding.The demand is clear,but the delivery model is broken.There are two clear delivery models:1)self delivery by the asset owner;or2)partnership with a flexible workspace operator(either a hybrid lease or management ag

15、reement).Asset owners are well placed to self-deliver managed suites,especially in a market such as Hong Kong,wherelease terms are typically short(as short as three years),therefore it would not create significantly more work for asset managers.However,creating a managed suite product as a standalon

16、e offering does not necessarily add value to the occupier.A managed suite product may be better positioned as part of a broader stack of amenities,such as a lounge and shared meeting spaces,therefore a partnership with a flexible workspace operator may be a solution to an asset owner looking to deli

17、ver a managed suite product.Curating an asset to deliver a broad range of products provides a platform to secure occupiers with differing demands,which will increase leasing velocity in a new development and protect against void periods in mature buildings.Careful consideration should be given to th

18、e stacking of amenities and flexible workspace in an asset in terms of what function each space provides and how they complement each other,particularly if there are multiple operators delivering F&B,wellness offerings and flexible workspace.This is the art of placemaking,which is increasingly impor

19、tant for asset owners in the fast-evolving market landscape.T U R N T H E K E YIn Hong Kong and many other marketswe have observed occupier demand trending towardsenterprise solutions and turn-key offices.Enterprise customers have always been a big part of our business.However,we have noted that lar

20、ger deals have become much more commonin the past two to three years,and we believe this demand profile will continue.Partnering with asset owners allows for a broader,more integrated offering andbetter enables a building to capture the full range of demand.Paul MacAndrewGeneral Manager|Hong Kong&Gr

21、eater Bay AreaIWG Flexible workspace operators in Hong Kong have notedthat deals of 20 desks or more now account for approximately 20%of new deals.And asset owners have commented that almost 70%of occupiers with space requirements of sub-10,000 sq.ft.show a preference for fitted offices or turn-key

22、space.THE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG7THE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG8The catchall of“flexible workspace”has commonly been used to describe both serviced offices and coworking.However,the sector is much broader and encompasses a spectrum of products that can

23、 be integrated across a building.In addition to physical spaces,asset owners are increasingly seeking to offer services and experiences to their occupiers and the delivery of these are also part of the sector.In addition to the workplace products set out here,we are increasingly seeing the integrati

24、on of wellness and F&B offerings in buildings.The right integration,whether via a single operator or multiple,can leadto the multi-purposing of space and therefore increased monetisation opportunities.For example a work lounge can be paired with a coffee shop and/or a light F&B offering.Meeting,conf

25、erencing and event space often requires full-scale catering so it could be paired with a restaurant and with thoughtful programming could also double as wellness space.T H E B R O A D E N I N G S P E C T R U M O F F L E XThere are opportunities for asset owners to reimagine how office space is deliv

26、ered in order to capture occupierdemand for products beyond the traditional lease of a bare shell office.Approaching the landlord-tenant relationship as a partnership can have benefits for both parties,providing solutions for the workplace requirements of occupiers with less friction and a better ex

27、perience for end users,along with“stickier”customers(occupiers)for asset owners.A further segment in the broadening spectrum of theflexible workspace sector has emerged in recent years the private members club.While this may not be the solution for hybrid and distributed work models at scale,we are

28、seeing an increasing number of asset owners looking to add clubs in their office buildings.A hospitality operator has the capabilities to deliverthe amenities,services and experiences asset owners areseeking in order to set their buildings apart,while providingthe ability to bring wellness,F&B,a wor

29、k lounge and meeting,conferencing and event space under a single platform.Expanding these products to a building level andhelping to create a community,therefore stickiness,is the driver for an asset owner.WORK LOUNGE-Informal meetings-Breakout spaceHourlyHOT DESK/DEDICATED DESK-Shared facilities-Op

30、en plan environmentPRIVATE OFFICE-Private office or suite-Limited Customisation-Shared facilitiesMANAGED SUITE-Dedicated whole floor or suite-Branding and customisation-Fewer shared facilitiesMEETING,CONFERENCE AND EVENT SPACE-On demand meetings-Training Rooms-Town Hall Meetings-Corporate Events-Con

31、ferencingHourly/DailyDaily/MonthlyAnnuallyMulti-YearTHE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG9Table 1:Major Flexible Workspace Operator Deals in 2022Operator BuildingSize(sq.ft.)TEC28 Stanley Street55,000 IWG8 Queens Road East64,000 IWGLKF Tower25,600IWGICC33,800The Flexi GroupChinachem T

32、ower17,000theDeskEnterprise Square 518,000 theDeskOne Pacific Centre18,000 Bela OfficesThe Chelsea12,400Bela Offices New World Tower 110,300Bela OfficesDina House10,000The Great RoomCheung Kong Center21,300WeWork9 Queens Road Central13,700CompassAdmiralty Centre Tower 120,000CompassLee Garden Two31,

33、400CompassLee Garden One7,600CompassInfinitus Plaza47,600Total:405,700Currently,the flexible workspace sector is guarded over occupancy rates and so it is difficult to pinpoint a vacancy rate within flexible workspace locations across any given market.Until there is greater transparency this cannot

34、be truly measured.However,asset owners who tick off occupancy in a building by entering into a lease,or any form of agreement,with a flexible workspace operator may not understand the full picture and are missing an opportunity.In 2022,405,700 sq.ft.of office space was taken up by flexible workspace

35、 operators.However,approximately 200,000 sq.ft.was handed back,meaning positive take-up was approximately 200,000 sq.ft.T A K E U P O R F A K E U P?Set against the overall market,which saw negative take-up in 2022,the flexible workspace sector contributed positive“take-up”.However,flexible workspace

36、 is essentially the repackaging of space and so we need to consider how we account for this.We would encourage asset owners to fully integrate flexible workspace offerings with the traditional leasing of a building in order to unlock the full benefits of the model,whether the flexible workspace is d

37、elivered by a third party or not.Notably,over a third of deals in 2022 were non-traditional leases,meaning either hybrid or management agreement.Flexible workspace operators were particularly active in2022 and remain active in 2023 as a source of take-up forasset owners.However,we would argue that t

38、ake-up byflexible workspace operators is,in fact,not true take-up.THE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG10TEC,28 Stanley StreetTHE FLEXIBLE WORKSPACE OUTLOOK REPORT 2023|HONG KONG11Location Value refers to the premium associated with a location which translates into higher property val

39、ues in the vicinity,the inverse is also true.But what value should we attach to experience,answer:a high one.One of the biggest contributors to a buildings success is occupier experience.How an asset owner delivers on experience will affect leasing velocity,retention and rental tone,in turn impactin

40、g capital value.So,who is best placed to deliver the software to an asset owners hardware and what does this look like?An asset owner could build out a team,at present this typically sits with marketing teams or the asset management/in house leasing teams.Alternatively,an asset owner could partner b

41、ut with who?Flexible workspace operators brought the theme of community to the office sector but perhaps there is an opportunity for hospitality operators hotel and members club operators,for example,to meet the growing need of asset owners to elevate the occupier experience.E X P E R I E N C E E X

42、P E R I E N C E E X P E R I E N C EThe choice of partner may largely be guided by the physical spaces that an asset owner chooses to deliver,shouldthere be a flexible workspace operator in the building it may make sense to extend their scope of physical spaces to include building level amenities and

43、 to broaden the range of services offered to include programming and content in order to engage occupiers on a building level.However,for many flexible workspace operators this is outside of their core business and would require third parties to support delivery.In Hong Kong,Swire Properties and Hon

44、gkong Land are great examples of asset owners striving to elevate occupier experience.Swire Properties will bring online a full stack of amenities,together with programming,at Two Taikoo Place that promises to set a new global benchmark,while Hongkong Land have recently delivered a range of initativ

45、es including on-trend F&B at Basehall,experiential retail at Belowground and dedicated work,meet and host amenities at Centricity,supported by best in class technology.In summary,asset owners should carefully consider what they wish to deliver in terms of experience and what physical spaces can driv

46、e engagement,before then working through a process to determine the most appropriate Entering the post-pandemic era,the lines of work and play are blurring,and community and social connections are prioritised.At Swire Properties,we have embarked on a creative transformative journey to build well-des

47、igned physical spaces for our people to forge meaningful connections.This is matched with an array of arts&cultural programmes and tenant engagement events where we cultivate the social fabric of our Taikoo Place community.Natalie LeungSwire PropertiesA great workplace extends beyond an occupiers fo

48、ur walls,now,more than ever,an asset owner must consider placemaking as part of their asset management strategy and create engaging,well programmed and productive environments for the end user,elevating the occupier experience,otherwise they will no longer be competitive in the market.RECENT MARKET-

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