In the new era of technology, many trends have changed alongside popular trends. In turn, these have led to a never-ending evolution of various industries. In the case of real estate, one of the prominent trends seen today is co-working and the rise in demand for flexible working spaces. Given the low budget and need for flexibility, such spaces have been popular among start-ups and freelancers for their shared amenities, open plan designs and adaptable spaces. While Covid-19 has brought about a slew of challenges for the real estate industry, it has also created more opportunities for co-working spaces. In this article, we will look at why has the pandemic boosted the demand for flexible workspaces.
What are flexible working spaces?
Most flexible workspaces feature open plan designs that promote collaboration of teams and minimal physical walls between rooms. Of course, there are quiet spaces for workers to work undisrupted and adaptable workstations such as standing desks. Coupled with shared amenities including meeting rooms and pantry, this means that different entities in the same workspace are likely to mingle, which can help improve their social capital and productivity.
Why are flexible working spaces popular?
Space is a precious asset, and an expensive one at that. For start-ups and Small Medium Enterprises (SME), this could amount to a hefty sum especially since landlords traditionally ask for longer leases lasting for a few years. Flexible workspaces are a viable alternative for these organizations as they offer shorter leases and businesses can choose to only own what they need, and not the whole office. Businesses also get to choose from a variety of plans, ranging from co-working offices to hot-desking. These can help to cut costs for these smaller organizations.
How has the pandemic affected flexible workspaces?
According to Channel News Asia, a YouGov survey conducted in April revealed that over 60% of participants would prefer a mix of working in the office and working remotely. The pandemic has forced most of us to work remotely. McKinsey & Company suggests that there is high potential for such a trend to continue for the “highly educated, well-paid minority of the workspace”. In light of such ambiguity of future office trends, businesses are turning to flexible workspaces to better meet their needs.
1. Dynamic office spaces with changing needs
Unlike traditional offices, dynamic office spaces have furniture and open spaces that can adapt to changing needs easily without much cost or time. Since the pandemic has brought about new requirements, flexible workspaces can better adapt to the needs of social distancing. In addition, the shared facilities help businesses save costs on spaces they use less.
2. Work from home has led to lower utilization rates
The pandemic has also brought about higher rates of remote working. Recently, Singapore’s Phase 2 (Heightened Alert) had restricted offices to hold no more than 50% of their workers. As a result, there has been a fall in office utilitarian rates, which refers to how many members are physically present in the space. As a result, businesses now need less office space, and may require some flexibility in determining the how much office space they need given the changing measures for pandemic.
As a result, flexible working spaces have risen to popularity. Both The Great Room and JustCo have noted an increase of 30% to 40% utilization rates post-circuit breaker. One of the many reasons is dynamic offices can accommodate companies that are looking for a “flex-and-core” model for separate work teams, with a part of the team working from a traditional ‘core’ office space while others work from flexible spaces. Businesses can also choose a mixture of traditional and flexible office spaces alongside variable and fixed lease terms to better accommodate businesses’ changing needs. In addition, it can help with the organization’s Business Continuity Plan (BCP) as they can secure core spaces for critical business processes, and reserve flexible workspaces for other business services.
3. Allows for businesses to scale up / down more easily
Many businesses have taken a hard hit during the pandemic, which has brought about an onset of transformation in every part of our lives. Economic uncertainty coupled with fickle future trends mean that businesses are more cautious about entering in long leases in traditional offices, which often last between 2 to 3 years. Businesses today would prefer to have variable leases that offer flexible office spaces, which can allow for them to scale up or down easily. As a result, many have turned to co-working spaces that are usually leased for shorter periods between 3 to 6 months.
Such a trend has also been observed in Singapore over the past year. Despite the overall market for office spaces dipping due to economic uncertainty, many businesses have turned to co-working spaces leading to an increase in demand for the industry.
Office spaces will remain relevant and important
Although it seems that work from home is currently the norm or “default” for most of us, experts believe that this is unsustainable as workers often find working in dedicated office spaces more productive and is beneficial for their social capital. In addition, some benefits of working in an office cannot be replaced by remote work, such as the transmission of tacit information which refers to information that cannot be easily codified. This means that most businesses will still need office spaces, even if part of their team works remotely. Hence, the demand for flexible workspaces is likely to continue rising even as safety measures are lifted.
While dynamic workspaces have its challenges particularly prominent during Singapore’s “circuit breaker” in 2020, it presents a more suitable option for organizations that are cautious about the unforeseeable future. Hence, flexible workspaces are likely to continue to be increasingly popular in these changing times as work-from-home is likely to persist.