Co-working spaces in the CBD to continue expansion in 2022: Cushman & Wakefield

CO-WORKING spaces in the Central Business District (CBD) will expand substantially in 2022, with these spaces having reached 5.5 per cent of Grade A office spaces within the CBD, according to Cushman & Wakefield in a new report on Dec 23.

The completion of the asset enhancement initiative works at 21 Collyer Quay will also spur the expansion of co-working spaces in Singapore, it said.

Demand for co-working spaces has been uncertain in the last two years since the pandemic hit. Occupiers have cut back on office spaces to rationalise costs and lower office utilisation, due to the implementation of safe management measures and a rise in remote working.

Co-working operators took up only 0.2 million square feet (sq ft) of office space in 2020 and 2021 combined, as compared with 1 million sq ft in 2019 alone.

However, office demand from co-working operators is expected to see a gradual recovery amid improving market conditions and a growing demand by occupiers for "flexibility, workplace analytics, and hospitality-style services in their workspaces", according to Wong Xian Yang, Cushman & Wakefield's Head of Research, Singapore.

Currently, about 82 per cent of Singapore's co-working spaces are located within the CBD, especially within its Grade A offices, which cater to the increasing adoption of "core-and-flex" strategies and the rapid expansion of technology companies in the CBD.

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Cushman & Wakefield said that as occupier demand in the CBD recovers, co-working operators will be more confident to directly lease space. It added that Grade A office rents are forecasted to rise by 4.6 per cent year-on-year in 2022.

"The market could see a hybrid arrangement, where the co-working operator takes a direct lease and a management contract for different floors," said the real estate services company.

It also observed that major co-working operators WeWork, JustCo and IWG continue to maintain their dominance with more than half of the market share in Singapore.

Notable co-working openings in 2022 include WeWork's anticipated launch of a 200,000 sq ft space at 21 Collyer Quay, which is anticipated to be the largest flex supply to come into the market and will increase current islandwide flex space stock by about 6 per cent in 2022.

Going forward, Cushman & Wakefield expects the upcoming supply of newly-completed Grade A offices and business parks to cater for flexible demand. One key driver for co-working demand is the growth of technology firms in Singapore, while growth in demand for flexibility as well as "space-as-a-service" is another likely possibility as hybrid work becomes the norm, said the company.

"The value proposition of co-working spaces remains unchanged and offers increased flexibility and conversion of capital expenditure into operating expenditure," it added.