Flex space providers – which includes co-working and serviced offices – accounted for 31% of net absorption nationally in 2018-19. Despite this rapid expansion, we don’t deem there to be an oversupply of flex space in Australia, especially when compared to overseas markets.
There will be short-term challenges for flex providers due to the economic climate. Some won’t survive due to unsuitable operating models or financial positions.
However, there will be opportunities for flex space providers over the medium term outlook period as occupiers return to work but put expansion plans on hold until the future becomes more certain.
There will also be longer-term opportunities as occupiers increasingly adopt core + flex models to create agile real estate portfolios. Flex space in suburban markets will help facilitate this; we expect growth in the supply of flex space in suburban locations over the coming years.
Flex space will continue to evolve, and landlords will become larger players in the provision of flex space through their own offering of partnering with operators.