RESEARCH: Coworking is breaking records
Generator provides space for members to meet, work, eat and drink with a fully stocked cafe and bar available. Photo / Supplied
Auckland’s coworking scene continues to evolve, and rapidly, now representing the fastest growing occupier of office space in the city, says Lloyd Budd, Auckland commercial director for Bayleys Real Estate.
Speaking at the recent annual CoreNet Global NZ Symposium at Shed 10, Budd presented a selection of findings from the third annual Bayleys Research report on the coworking industry to New Zealand’s leading office occupiers, landlords and suppliers.
Focusing on what’s next in the coworking sector, Budd questioned some of the sector’s leaders — including Ryan Wilson, from Generator; Lisa Bryan, B:Hive at Smales Farm; Jonathan Kearins, WeWork and Pierre Ferrandon, IWG — before an audience of 500 seminar attendees.
Budd says key trends coming through to the sector include the emergence of the corporate sector, which is now responsible for sustaining 30 per cent of leasing revenue coming from co-working space, and the forecast arrival of US-based coworking space provider WeWork in New Zealand by the end of next year.
What was once the domain of smaller businesses, techies, entrepreneurs, start-ups and creative companies looking to collaborate with like-minded people, share ideas, services and reduce rental costs, coworking has attracted many in the corporate sector who want to tap into the start-up culture and win new talent and new clients.
“And because of this industry-wide attraction, the sector continues to evolve into a powerhouse of office space absorption across Auckland,” Budd says.
According to the 2018 Bayleys Research coworking survey, there were just three operators and less than 2000sq m of occupied office space in 2011, which has expanded into around 20 operators and almost 30,000sq m of space.
“Not only has the growth been exceptional over the past seven years, but the growth in the past year has broken through new records,” says Budd.
The total amount of coworking space has grown by a further 25 per cent in the 12 months to April 2018 to 29,400sq m. And more growth is coming.
The coworking survey, which is the most comprehensive in the market, shows an additional 15,700sq m is also in the pipeline and due for completion over the next 12 months.
While growth across the sector is evident, there are some clear leaders emerging with the top three operators – Generator, BizDojo and B:Hive – controlling 71 per cent of the total space which continue to grow their offerings.
Budd also notes that the two biggest players in coworking globally, WeWork and IWG which own Regus and Spaces, are looking at their New Zealand options.
“Spaces, are due to open new offices on Karangahape Road soon. Meanwhile WeWork which is yet to arrive on our shores, is rumoured to be scouting locations for a potential 2019 opening”.
“WeWork moving into the area would not be an unusual step given the Auckland evolution in coworking is following similar global trends.”
The number of coworking spaces and members are growing at a solid clip, according to the latest Deskmag Global Coworking survey. Worldwide the number of coworking spaces is projected to increase by 22 per cent to 18,900 for calendar 2018; and members to increase by 33 per cent to 1,690,000.
The latest Bayleys Research survey reveals there has been a general consolidation in total member numbers to around 2900 from years of back-to-back growth.
Occupancy levels currently stand at around 74 per cent of total member capacity of 3500.
“Given present occupancy levels and the indicative pipeline of new available space, this should allow for the expected member number growth over the remainder of 2018,” Budd says.
“With the increase in office space that is becoming available over 2019, we also expect operators will look to see what space is available once the bigger operators have moved to their new premises. This may leave behind new opportunities that the coworking operators can take advantage of. So 2019 will definitely be an interesting year for the sector’s next steps in its life cycle here in Auckland.”
One of the coworking sector’s trends occurring overseas is highlighted in the Deskmagsurvey which shows tech operators looking to include bigger coworking spaces as well.
“Given the larger floorplate offerings, especially in the Precinct Properties Innovation precinct, we expect this trend to quickly eventuate locally as well.”
Budd says that when it comes to cost for many businesses, coworking can be an easy one-stop real estate solution with flexibility at the heart of the operation.
“For a monthly fee, members can hire a work area, be it a hot desk, dedicated desk or enclosed office, depending on their needs. They get all the facilities of a modern office yet they don't have to commit to a lengthy lease”.
According to Bayleys Research, monthly dedicated/flexi desk rates have recorded little change over the survey period and range from $499 to $1499 for the larger operators; and $400 to $900 for the smaller operators. Casual and flexi rates typically range between $150 to $499 per month.
Lloyd Budd, Bayleys