Australian demand for flexible workspace slows despite a regional uptick
Demand across Asia Pacific lifted, while Australia declined. Image: Canva.
  • APAC recorded a 16% increase in demand.
  • Cities on the east coast recorded declines of between 15% and 38%.
  • Melbourne desk rates are the most affordable among the big cities.

Flexible workspace demand has risen across the globe, with the latest research from The Instant Group indicating rises in demand from the second half of 2022 to the first half of 2023 of 16% for Asia Pacific (APAC); 18% for the United Kingdom, and 24% for Europe, the Middle East, and Africa (EMEA).

The outlook is generally positive, with the report finding that average transaction sizes across APAC remained stable at 9.6 desks for the first half of 2023. However, the comparison to the first half of 2019 (4.5 desks) is considerable.

Smaller transaction sizes of between one to two desks across APAC have fallen from 15% of total flex desks in 2019 to five per cent in 2023, while larger transactions for +25 desks have increased from 24% of total flex desks occupied in 2019 to 42% in 2023.

The report also found that contract lengths have grown by five per cent, now 10.7 months, up from 10.2 months in the second half of 2022; this is below figures for the first half of 2019 when contracts were for 11.5 months.

“Overall, across APAC, occupier confidence is returning to the flex market, with markers such as demand and the number of transactions all continuing to grow,” said The Instant Group APAC managing director, Sean Lynch.

“Companies are taking on flex as an agile workspace solution; however many are still reluctant to commit for long periods of time due to ongoing economic uncertainties.”

Australian demand slows

Brisbane, Sydney, and Melbourne are all expected to see reduced levels of demand across 2023. This comes despite the regional and global rises.

Forecast demand changes for flex space

City 2023 demand vs. 2022 demand 2023 demand vs. pre-pandemic levels
Sydney -15% -45%
Melbourne -15% -31%
Brisbane -38% -26%

Source: The Instant Group.

The report noted that Australia is still in ‘recovery mode’ following the pandemic.

“This is due to companies investing more time into their workplace strategy as well as space reduction, since they are now actively reconsidering optimal solutions for their employees and incorporating serviced offices into their portfolios,” said the report.

The rate of new stock coming online is also flat, with the report noting between zero to three per cent growth across the three cities.

“While we have seen demand decrease year on year in Australia, this can be explained by a demand correction taking place – something that many markets across the APAC region are experiencing,” said Lynch.

“We are still seeing strong interest in flex with the number of enquiries decreasing but the quality remaining high, with many businesses converting into the uptake of office space.”

Brisbane bucks the desk rate trend

While Sydney and Melbourne saw rates only grow by three and one per cent year-on-year, respectively, Brisbane is set to see growth in desk rates. The Queensland capital is forecast to record 26% YoY growth, with a flex desk costing an average of $687 per month.

An imbalance was the driver behind the forecasted growth. Brisbane bucked the demand trend across the pandemic, and despite a decline this year, supply has remained stagnant; this rate of growth is expected to stabilise over the next few months.

Sydney desks are currently more expensive than in Brisbane ($759 per month), while Melbourne is the most affordable, at $594 per month.

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