JLL’s latest report highlights the evolving nature of office spaces and the attractions, limitations, and market trends that will emerge as a result of flexible space being applied on a sustained basis. The report indicates that flexible space will take a different form than it has in the past, but will continue to grow as corporates and investors respond to the increasing demand for flexibility brought on by COVID-19.
“On a regional scale, extensive strides have been taken by Dubai to ensure flexible workspace frameworks are fixed and maintained in line with intensified measures aimed at combating COVID-19. To meet the growing demand, there has been a rapid increase in the total supply of flexible office space in the Emirate. Although the effort is gaining momentum, the level of flex space in Dubai remains below the EMEA average of 2.3%, suggesting there is room for further growth,” said Toby Hall, Director - Head of Office and Business Space Leasing for JLL MENA.
- A shift in demand: Based on structured conversations with more than 20 major corporates in Dubai, the report highlights that most companies see flex space as part of their overall portfolio mix going forward. The major factor in deciding which flex facility to favour appears to be the reputation of the operator, followed by the profile of other tenants. Interestingly, factors such as cost, and location of the space appear to be considered of lesser importance in the choice of flex space compared to more traditional leases.
- Market consolidation: Driven by the shift in the global flex market away from SME’s to larger corporates, the Dubai market is expected to experience more concentration in the hands of fewer but larger operators. This will inevitably involve a setback to some independent operators and is likely to be exacerbated by short-time financial pressures resulting from COVID19.
- The future is private: COVID19 is resulting in a global shift away from shared co-working facilities to more private and enclosed spaces. This trend is also apparent with the majority of centres offering only enclosed offices or a hybrid mix of enclosed offices and co-working space. Centres that were originally targeting the co-working sector are now seeking to remodel their space to offer more enclosed offices.
- Diversified locations: Another trend we anticipate is for more flexible office facilities to be accommodated in non-office buildings. Given the particular oversupply in the retail and hotel markets, several developers are currently looking at opportunities to incorporate flexible office concepts space within vacant or underutilised space within retail malls or hotels. These properties offer many attractions for flexible office operators including generous parking & access to retail, food services, and other supporting facilities.