The flexible office space market in the Asia-Pacific (APAC) region has shown steady growth, according to CBRE. However, the overall expansion remains significantly slower compared to the rapid growth experienced before the pandemic.
From 2020 to the first half of 2024, the flexible office market registered an annualized growth rate of 4%, a substantial decrease from the 51% annualized growth rate recorded between 2015 and 2019.
“The APAC flexible office sector has now entered a phase of normalized growth compared to the pre-COVID-19 boom years,” CBRE notes.
Singapore stands out with some of the highest penetration rates for flexible office spaces in the APAC region. As of the first half of 2024, flexible office space accounted for approximately 4 million sq ft in Singapore, representing 5.4% of the total office supply and 5.1% of Grade-A office stock.
Across the APAC region, flexible office space currently constitutes about 4% of the total office stock and 3.2% of the Grade-A office stock as of the first half of 2024. Approximately 3,000 flexible space hubs are operating throughout the region.
Recent growth in the APAC flexible office market has been largely driven by cities in India. As of the first half of 2024, flexible office space made up 10.7 million sq ft or 6.8% of Grade-A office space in Delhi. In Bangalore, flexible office space accounts for 15.5 million sq ft or 6.9% of Grade-A office stock.
CBRE also points out that flexible office space providers have adjusted their business strategies post-pandemic, with a greater emphasis on revenue diversification, turnkey-managed solutions, and enhancing facility utilization.
Many operators are exploring alternative deal structures, including management and capital expenditure contributions from landlords, to create more sustainable business models.
On the other hand, cities in mainland China have seen a decline in flexible office space penetration as the market consolidates. In major cities like Beijing, Guangzhou, and Shenzhen, penetration rates in the Grade-A office market have fallen below 2% as of the first half of 2024.
The APAC flexible office market continued to expand in the first half of 2024, although growth rates have stabilized in recent years following the pandemic. According to an August research report by CBRE, flexible office space supply across 20 major APAC markets reached 89 million sq ft as of June 2024, representing a 3.9% increase from December 2023.