How High is the Demand For Co-working Spaces?

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How has the work set up in the Philippines changed over time and how does this relate to the rising demand for co-working spaces?

Flexible workspaces are also known as ‘temporary workspace’. They are shared office spaces managed by operators which cater to the need for a venue for freelance workers, startup companies, smaller corporates, and information technology firms. They have basic equipment like phone lines, desks, and chairs, to name a few. And tenants or individuals are given access to these without the requirement of a long-term commitment in terms of contract or lease duration.

In these spaces, there are unassigned desks and communal work areas which will encourage individuals to feel freer and move around as they work.

Types of Flexible Workspaces

There are two types of workspaces currently existing in the Philippines:

  • Serviced Offices are spaces occupied by small businesses or corporate organizations. These are similar to a traditional office lease, but included in the amenities are utilities such as phone and internet provision. Also included in the lease are the manned reception, administrative support, and security services, among others.
  • Coworking Spaces is a workplace with perks similar to a serviced office but is open to any individual who needs a workspace. In this setup, people – mostly freelancers and home-based workers –  get to work outside of their homes and share the space with others who share the same path as them.

Serviced offices appear to have a traditional office environment while coworking spaces promote a more collaborative environment. Both are spaces owned by someone else and has become an alternative work setting and community with the opportunity for collaboration, knowledge-sharing, innovation, and so much more. Tenants get to do their work, meet other people with the same work set up and lifestyle without thinking too much of the administrative aspects of maintaining a building.

The Demand For Coworking Spaces

According to a published report by The Instant Group, a flexible workspace specialist, in October last year, the demand for flexible workspaces in the Asia Pacific (APAC) has had the fastest growth in the world over the last 12 months. This type of industry took off later in Asia than it had in US, UK, and the European market but the supply of flexible workspace is said to have increased to over 50% in some APAC market. This rise made Asia up to date with the other international market’s status.

The compounded annual growth rate (CAGR) of flexible workspaces in the Asia Pacific from 2014 to 2017 is currently estimated at 35.7%, exponentially faster than the recorded CAGR of U.S. at 25.7% and Europe at 21.6%.

As of writing, 7 out of the 10 largest and fastest-growing global markets for flexible workspace are found in the Asia Pacific. Hong Kong is still the largest city in Asia for flex workplace with 340 identified centers. This led Instant Group to conclude that the growth will continue, at a rapid pace even, in APAC.

In the Philippines, there are currently 110 coworking spaces in Metro Manila alone from the 80 centers recorded in 2017. Colliers International refers to the flexible workspace as a fundamental part of commercial real estate in their report released last year.

Believe it or not, the presence of flexible workspaces in the Philippines started around the 1990s with the serviced offices. As years passed, it has been observed that the demographics for the flex market had a huge shift towards a younger and more tech-savvy workforce.

There is up and down progress when it comes to growth of office spaces in 2014 to 2017 but the recent numbers in terms of demand have been stable. Offshoring and Outsourcing (O&O) and corporate businesses are the main occupiers of serviced offices followed by startups and smaller enterprises such as corporate and IT firms.

This demand can be associated with three things: (1) the lack of big space, (2) the increase in the number of small businesses, and (3) the growth in the need for a more flexible work schedule demanded by the workforce. This kind of work arrangement is said to improve productivity and efficiency among workers and this was reported as the key benefit and the primary driver of this change.

Why Choose Flexible Workspaces?

Learning all about these data, here’s an undeniable fact: there is an increasing demand for coworking office space in the Philippines. But what caused this sudden rise? Why are business preferring this kind of space over others? Here are the five common benefits that flexible spaces offer which makes them attractive choices for businesses:

  1. They are flexible
    Serviced offices will not constrain a startup or small organizations to a long-term agreement. Since flexible workspaces cater to these types of setups, they are also flexible when it comes to details such as total headcount or employees. Business changes won’t give you or any organization a headache.
  2. They are cost-efficient
    Compared to setting up your own office from scratch, availing an office with already available materials, equipment, and personnel an office need—which you can avail on a packaged cost—is much more cost-effective.
  3. Moving in and out is easy and convenient
    There is no room for complicated contract negotiations or difficult dealings with brokers, landlords, and property managers here. Firms can move in and out of the office space on short notice.
  4. They are a venue for collaboration and innovation
    Aside from a provided space where you can finish your workload, it can also be an avenue for brainstorming and exchanging of ideas—may it be with a co-worker or a random stranger.
  5. They provide a community
    Self-employed individuals or small group startups find a community with commonality in these flexible workspaces. Some offices even offer activities and amenities to improve the members’ well-being and to promote social and business networking.

The Future of Coworking Spaces in the Philippines

Shifting towards flexible workspaces was called a trend of 2018 in the Philippines.

According to a study about the coworking conditions in the Philippines conducted by Santos Knight Frank, Inc. 69% of multinational companies are planning to increase their use of coworking spaces, 80% are expecting to grow their current collaborative spaces over the next three years, and 44% said that they will allot a fifth of their office space as flexible spaces and they see this as a trend in the next three to five years.

Companies are open to transform their offices in order to provide a more “collaborative” office setup for their employees. This is beside the fact that real estate developers are starting to see and going after the trend.

Colliers International Philippines even had “Top 10 forecast for 2019: Flexibility is the name of the game” as their report title. The said that the strong demand and the evolving preference of the tenants were the factors behind the flexible workspace trend. This can be observed as the residential developers start to tweak their projects to cater to the Chinese offshore gaming business demands. Colliers forecasted a 10% per annum growth over the next three years and more flexible workspaces are seen to be offered in malls, hotels, dormitories for professionals, and residential towers.  

The flexible workspace business has a bright future in the country this year. This is good news for the growing number of freelancers in the Philippines and a good answer to the high demand for coworking spaces in PH. Whether you are a freelancer looking for a new environment to work at, a startup looking for a place to temporarily stay in, or a businessman looking for new investment, learning about flexible workspaces and its future in PH something worth knowing.

Sources: The Instant Group, BusinessWorld, and Colliers

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