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Power in numbers: flexible workspace big guns launch lobby group

Martin Kelly
Martin KellyReporter

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Tired of being left out of the conversation, Australia’s leading co-working businesses have formed the fast-growing sector’s first political lobby and support group, Flexible Workspace Australia (FWA).

Co-chair Fiona Mayor said COVID-19, during which key government decisions affecting flex and co-working spaces were made without consultation, finally brought the major players together.

Co-working operator The Commons is leasing 4000sq m of 388 George Street, Sydney. 

“There’s power in numbers,” said Ms Mayor, who runs The Thrive Network.

She said through the pandemic it became clear that co-working and flexible workspace providers were not taken seriously or even considered an industry.

“There’s been an incredible response to Flexible Workspace Australia, with everybody from your local suburban co-working space to WeWork, IWG, Hub Australia and Wotso wanting to be involved, wanting to help,” said Ms Mayor.

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“I think the pandemic has brought the industry closer together.”

Ms Mayor said the goal of FWA was to give the industry a voice, conduct research, represent member interests in dealings with government and support policy development.

Balder Tol, general manager of WeWork for Australia and south-east Asia, said it was vital for the industry to speak with a single voice to ensure its views were incorporated into actions such as national cabinet’s Code of Conduct for Commercial Leasing.

As one example, he said the code of conduct, part of which allows rental payments to be deferred for up to two years, did not take into account the dramatically shorter memberships signed by co-working tenants.

“I think the formation of this industry body allows for a single point of contact and alignment on some of the key messages [when] it comes to regulation in the real estate industry,” Mr Tol said.

Occupancies across WeWork’s Australian network of 21 sites have slumped from around 80 per cent to 60 per cent since the COVID-19 lockdowns were introduced in NSW and Melbourne.

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But Mr Tol remains optimistic the rebound will be even stronger than it was in the months following the lifting of the first lockdown in NSW last year, when momentum built strongly through the first six months of 2021.

“Talking about the bounce-back, in Q2 this year we saw the highest number of deals closed in the history of WeWork Australia,” he said.

In a sign of confidence of the coming rebound when lockdowns are finally lifted in NSW and Victoria, co-working business The Commons has signed three leases for 2022 across more than 9000sq m in Sydney and Melbourne.

The biggest lease is for 4000sq m covering four levels at the redeveloped office tower at 388 George Street in Sydney’s CBD, co-owned by Brookfield and Oxford Investa Property Partners.

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The Commons, a member of FWA which now has six spaces in Melbourne and one in Sydney, has also committed to leases of 3300sq m in Collingwood, Melbourne, and almost 2000sq m in Surry Hills, Sydney.

Co-founder Cliff Ho said a year ago he did not think growth would be on the agenda, “but as soon as Melbourne got out of that big lockdown in mid-November” demand exploded.

“We’d just opened a new site in Cremorne [3500sq m] and we filled the whole space in 10 weeks,” he said. “Then a couple of months later we opened South Yarra and got to 85 per cent occupancy in just three months.

“We got some big companies, Spotify, Riparide, some great organisations, and we just saw a huge shift. And that gives us the confidence in the demand for flex space.

“When we’re not in lockdown, companies really do want to get back to the office and they want that flexibility as well.”

JLL research shows that co-working space in Australia’s major CBDs was strongest from 2018 to 2020 and, after a slow patch through 2021, that demand is starting to rebound.

“Gross leasing volumes by flexible space operators in 2020 largely captured pre-committed space for deals that were signed prior to the COVID-19 outbreak,” said Andrew Ballantyne, JLL’s Head of Research – Australia.

“We have seen flexible space groups re-emerge and start leasing space in 2021, reflective of improved tenant demand from small businesses and recognition by larger organisations that flex space has an important role to play in their long-term occupational strategies.”

JLL’s Head of Office Leasing – Australia, Tim O’Connor added: “We are now seeing a variety of flex solutions ranging from owner operated to third party to hybrid management models with increased amenity for occupiers.”

Martin Kelly is a property reporter based in Sydney covering all aspects of commercial and residential real estate including major deals, market trends and developments. Email Martin at martinkelly@afr.com

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