Helipads and basketball courts: The next generation of co-working spaces

The trend to co-working, or flexible working, has hit new highs in the number of operators renting out space in Australia’s major cities, the proportion of total office stock that is now being used in that way, and the quality of the offerings.

From rows of workers sitting in small spaces in cramped rooms, the sector has evolved dramatically, with one co-working hub running a chauffeured Mercedes-Benz city shuttle, electric bikes, a Smart car and even helicopter charter flights for that VIP out-of-town business lunch.

“I’ve been in the flexible office space for 20 years now and, at the higher end, we now have Central House, which we see as the hotel equivalent of the Park Hyatt,” says Jonathan Deague of The Deague Group, referring to the premises at 101 Moray in South Melbourne with that helicopter pad upstairs.

“We are now opening another Central House in Toorak Village which will be even higher end, for people in professional services and family offices. For that, we’ve taken 3200 square metres in a new development and we’re planning a $7.5 million fit-out to take co-working to another level.”

You’d think his original Central House would be schmick enough, with its other attractions including a basketball court, golf simulator, gym and 20-minute NeuroPOD sessions, said to be the equivalent of a two-hour meditation. But there’s also a curated range of events for clients, such as leadership sessions and a fitness challenge.

A helipad on the roof is just one of the sophisticated facilities at Melbourne’s Central House.

At the other end of the spectrum, even youth hostels are snatching a slice of the growing market.

YHA Australia is rolling out co-working spaces called Y-Hive across its properties around Australia, with the first in the YHA Blue Mountains hostel in Katoomba, NSW.

“We’re witnessing a significant surge in location-independent digital nomads seeking more flexibility to work remotely while they explore Australia,” says YHA Australia chief executive Paul McGrath. “We’re ensuring our properties are well equipped to cater to these growing needs.”

Research from residential real estate services company Colliers confirms the growth of flexible workspaces. In Melbourne, in 2018, just 1.38 per cent of office stock in the Melbourne CBD and fringe was flexible. Today, it’s 4.51 per cent, with 90 flexible workspace operators.

In Sydney, the sector has grown from a smaller base of 0.98 per cent to 2.81 per cent at the end of 2022, with 79 operators.

Sami Schiavi, Colliers’ head of flexible workspace, says many more corporates are now using flexible spaces, as well as entrepreneurs and start-ups, and much of it is landlord-led, as distinct from the specialist operators.

“A number of corporates don’t want to take on long-term leases and pay bank guarantees as they’re unsure of how much space they’ll need going forward,” says Schiavi, whose company is leasing luxury flexible workspace at The Bureau, 25 Bligh Street, Sydney, for the landlord Kingsmede, with private suites, an art lounge, a meeting space, a barista and a bar.

“When the staff headcount stabilises and they understand how much space they’ll need, then they’ll make those decisions. But there’ll always be demand for flexible space. For growing businesses, or for when there’s a particular project or any kind of change, it works well.

“The majority is used by [small to medium-sized enterprises], and then about 10 per cent by individuals, usually in start-ups, and the rest by major corporates.”

Those corporates have come to like it, especially if they don’t have all their staff in an office at once, and it can give them the intimacy of a small office with communal amenities, Schiavi says. “For individuals, it’s often nicer than being at home alone.”

That increasing popularity has come at a price. Flexible office marketplace platform Rubberdesk reports that rebounding demand has led to a 6 per cent year-on-year increase in the national median price.

Sydney now charges a monthly median rental of $955 a desk, up 10 per cent since the pandemic low, with Perth costing $675 a desk a month, up 12.5 per cent. Rents have softened in Melbourne, however, down 1.8 per cent to $660 a month, and in Brisbane, down 8 per cent.

“We know companies want the flexibility to grow, which is a real attraction of flexible and co-working space,” says Rubberdesk chief executive Jim Groves. “In Sydney, rates have risen for the fifth consecutive quarter and we’ve seen recently some really good, high-quality products come to the market, which has grown the price.

“If you want to win the commute, you have to give workers something valuable and enjoyable at the other end to make it worthwhile.”

Just as with permanent offices, flex space needs to be well located, with a good fit-out, and close to vibrant precincts with cafes and bars, Groves says.

“If you’re just sitting in a dull cubicle, you might as well be at home. But good flex space is here to stay.”

Article source: Queensland Property Investor