Flex vacancies blow out but rebound predicted as Abacus enters market

Tuesday, 21st September 2021 | Press

New data shows that the amount of flex, or co-working, space available to lease in Australia’s major city centres has blown out by 64 per cent from pre-pandemic levels.

Listed flex space rent rates have also plunged by up to 25 per cent, with the national fall averaging just over 10 per cent, according to listings data from sector-specific leasing site Rubberdesk.

Chief executive Jim Groves said real rents have probably fallen further, with tenants negotiating discounts of 40 per cent off the advertised price.

“What we’re finding is that when customers are coming to market and inspecting spaces and getting proposals they’re getting discounts off these listed prices of 30, 35, up to 40 per cent in some cases,” Mr Groves said.

He said flex spaces have been hit harder than traditional offices because tenants have been able to exit due to the shorter, more flexible lease or membership terms offered by co-working operators.

But Mr Groves said this looser structure will be a strength post-pandemic and in the long term, citing the rapid rebound of leasing demand in Britain, where it operates, after lockdown restrictions were lifted.

It is a view supported by major office landlord Abacus Property Group, which has just announced the launch of its new flex brand.

Flex by Abacus is being launched across 1200 square metres of space at 99 Walker Street, North Sydney, and 14 Martin Place in the Sydney CBD.

The spaces will be managed by Work Rooms, a workplace management business founded by Stuart Brown, former managing director of WOTSO Workspaces.

“We are breaking with the traditional conventions of long-term office leasing and adding flexible leasing options to our offerings,” said John Courtney, Abacus general manager of assets, retail and development.

The managing director of Abacus, Stephen Sewell, added: “Offering flexible space on dynamic leasing terms will widen our customer market and is expected to drive higher occupancy outcomes at our assets.”

In its 2020-21 financial year results, Abacus said it owns $1.6 billion in offices, with an average occupancy rate of 95.5 per cent

Also optimistic about the immediate future of flex working space is Melbourne developer the Deague Group, which launched co-working brand Central House at 101 Moray Street in South Melbourne, and will expand to Toorak in 2022.

Deague Group announced it has committed to 3200sq m of space over the third and fourth floors of Vicland’s St Germain office and retail project at 489-505 Toorak Road, due for completion next October.

Read the rest of the article by Martin Kelly here.

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Read the full report here: Rubberdesk 2021 Flex Market Report

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