By Ingrid Fuary-Wagner
Melbourne is on track for a record year of flexible office space deals with already 17,000 square metres leased in the city in just the first quarter of 2019.
Newcomer JustCo, a Singaporean co-working company, was behind all three of the co-working leasing deals that have occurred in Melbourne in Q1 – a 8250-square-metre lease at 15 William Street, 4000 square metres at 276 Flinders Street and 4720 square metres at 447 Collins Street – taking the total Melbourne leasing activity in the sector since 2015 to 71,300 square metres, the most in the country.
JustCo’s take-up of space in the first three months of this year is already more than half of the total leasing activity (in square metres) that took place in 2018, according to new data from JLL that tracks flexible space leasing in Australia’s CBD markets.
JLL defines “flexible space operators” as both traditional serviced office operators and co-working groups.
The only deal so far this year in Sydney is Compass Offices’ lease of 998 square metres at 207 Kent Street but JLL’s head of office leasing in Australia, Tim O’Connor, said more deals would occur throughout the year as space became available.
“We are still in the ramp-up phase for many of these operators so it’s almost inevitable that we’ll see more take-up until operators are satisfied with their penetration in the market.
“But it’s a tight market in Sydney and the other potential issue is that each of these [co-working] groups will want exclusivity in a building, so that restricts leasing opportunities. Even if you have vacancy in a building but there’s a co-working operator in there already, that rules out the opportunity for someone else,” Mr O’Connor said.
Expansion targets Perth, Brisbane
While large co-working groups initially set their sights on cracking the Sydney and Melbourne markets, the latest data shows they are now expanding their operations to the likes of Perth and Brisbane.
Perth saw a big jump in the take-up of flexible working space in Q1, after WeWork entered the market with a 7900-square-metre space at 152-158 St Georges Terrace and Regus took on 2790 square metres at 300 Murray Street.
“Perth is perfect for these operators because it’s still dominated by the mining sector and they have a lot of projects, so their employee size can grow very quickly,” JLL’s head of research in Australia, Andrew Ballantyne, said.
“Also the engineering and consultancy firms over there can go from next to nothing to being very large organisations by winning a big project from, say, BHP or Rio, so if you look at all the markets you could say Perth has the largest requirement for these types of users because of the project-based nature of the economy.”
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