Co-working space now makes up 5.5% of Singapore’s CBD Grade A office supply

This could increase significantly this year, especially in decentralised office markets.

When the pandemic gave rise to remote working and cost-cutting amongst most firms, co-working spaces were put to the test. According to Cushman & Wakefield, co-working spaces that offered flexibility as a key benefit became a potential vulnerability as occupiers cut back on office spaces to rationalise costs and lower office utilisation due to safe management measures. 

As demand became uncertain, co-working operators took up only 0.2 million square feet (MSF) of office space in 2020 and 2021 combined as compared to 1.0 msf in 2019 alone, according to Cushman & Wakefield’s latest report titled “State of Flex: Singapore”. 

“While co-working operators have taken a backseat due to pandemic uncertainties in 2020 and 2021,  office demand from co-working operators is expected to recover gradually amidst improving market  conditions and occupiers growing demand for flexibility, workplace analytics, and hospitality-style  services in their workspaces,” said Wong Xian Yang, Head of Research, Singapore at Cushman &  Wakefield. “The total stock of co-working space in the CBD Grade A office market has  reached about 1.7 msf, or 5.5% of total CBD Grade A office stock. We expect this to grow  substantially in 2022 with the completion of Asset Enhancement Initiative (AEI) works at 21 Collyer Quay.”  

Figure 1: Co-working operators demand 2019 vs 2020 and 2021 

CBD remains a preferred location, but co-working is decentralising 

Co-working stock remains largely concentrated within the CBD, with currently about 82% of island  wide co-working space located in the CBD.  

“A substantial proportion of total island wide co-working stock are found within the CBD’s Grade A  offices, which caters to the increasing adoption of core-and-flex strategies and the rapid expansion of  tech companies in the CBD,” said Mark Lampard, Head of Singapore Commercial Leasing at Cushman & Wakefield.

 “Co-working operators are also making inroads in decentralised office markets and have opened centres in both office and business park spaces. This is in line with the  decentralisation of commercial activities away from the CBD and the development of regional hubs in  Singapore, to bring jobs closer to homes." 

Figure 2: Past and Projected Co-working space within Grade A CBD officespace

What’s next for co-working? 

The demand for co-working spaces in the CBD and decentralized markets will continue to expand with the completion of new Grade A offices and business parks to cater for flexible demand due to: 

• Recovering occupier demand in the CBD – As occupier demand recovers, co-working operators will be more confident to directly lease space. 

• Rise of non-permanent employment - With digital transformation and new ways of working, existing jobs will be redesigned and employers that value operational flexibility may favour contingent workers and reduce their core of permanent staff to optimise labour costs. 

• The growth of technology firms in Singapore will be a strong driver for co-working demand. Technology firms can utilise co-working space from the start of the company cycle and even as they expand and mature. 

• More occupier demand for flexibility and “Space-as-a-Service” as hybrid work becomes a norm. The value proposition of co-working spaces remains unchanged and offers increased flexibility and conversion of capital expenditure into operating expenditure. 



 

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