Brief | Adaptive Spaces

H1 2024 Asia Pacific Flexible Office Market

August 1, 2024 3 Minute Read

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The Asia Pacific flexible office space market has remained steady in recent months, with the total volume of flexible space in the region reaching 89 million sq. ft. as of June 2024, an increase of 3.9% from December 2023. As of the end of H1 2024, flexible space constituted around 4% of total office stock and 3.2% of total Grade A office stock in the 20 major Asia Pacific markets tracked by CBRE.
Despite a return to growth mode after the pandemic subsided, the Asia Pacific flexible office space market has now entered a period of normalised expansion compared to the pre-COVID boom years. The rate of annualised growth decreased from 51% during 2015-2019 to just 4% between 2020 - H1 2024.
Recent growth in the Asia Pacific flexible office space market has been primarily driven by Indian cities, where expansion has been underpinned by demand for managed solutions offered by domestic flexible space operators. In contrast, most tier I cities in mainland China have witnessed consolidation by both international and large domestic operators, resulting in a decrease in market penetration. Flexible office space penetration in the Grade A office market in Beijing, Guangzhou and Shenzhen has fallen below 2%, placing them among the five cities in the region with the lowest rate of flexible office space penetration.
Recent years have seen an evolution in business strategy by operators of flexible office space in Asia Pacific. In the post-COVID era, operators’ priorities have shifted towards income diversification, turn-key managed solutions, and maximising centre utilisation. Operators are increasingly differentiating their brands and exploring alternative deal structures such as management agreements and CapEx contributions by landlords to create more sustainable business models. Leveraging turn-key managed solutions enables operators to increase commitment terms while providing additional value to occupier solutions.