The co-working revolution has already had a substantial impact on the office leasing process.

Adding date: 12.12.2018 | Albania

The co-working revolution that has been going on in Poland for more than two years has already had a substantial impact on the office leasing process. Real estate advisory firm Savills has identified recent key office market developments driven by the growth of the flexible workspace.

In 2018, providers of serviced offices and co-working spaces delivered a total of 50,000 sq m of flexible office space onto Poland’s five core markets comprising Warsaw, Krakow, Wrocław, Poznań and Łódź, says Savills. Newcomers included WeWork, New Work and BE Yourself, which joined those with an established presence such as Regus, Business Link and Mindspace. As a result, the five cities’ total flexible workspace stock now stands at 163,000 sq m, most of which is in Warsaw (114,000 sq m) and Krakow (25,000 sq m).

To say that co-working spaces and serviced offices have been expanding recently at a rapid pace would be an underestimation of the scale of the revolution going on. In the past 12 months, flexible workplace providers announced new locations almost only a few days apart. Some signed leases on projects which will not be completed until next year or even two years later. It will be a moment of truth for the new phenomenon. We will probably see operators consolidate on the market or rents for such space fall, but surely there will be no going back to the pre-coworking revolution era, - says Jarosław Pilch, Head of Tenant Representation, Office Agency, Savills.

According to real estate advisory firm Savills, office market developments caused by the growth of the flexible workplace segment have resulted in competition for tenants among serviced office and co-working space providers and landlords offering traditional office space. This, in turn, has led to more flexible lease terms on older office space and developers creating their own co-working brands.

Another notable trend is the rise of hybrid transactions, say Savills analysts, where companies lease both some traditional office space and some serviced office or co-working space to enjoy more business flexibility. In addition, tenants can use flexible spaces in the early months of their operation on the Polish market before relocating to target office destinations or use such space in the time between the expiry of their current leases and moving to new offices.

Office landlords, inspired by what co-working providers do, are increasingly considering hiring community managers with responsibility for building communities of building tenants and users, for example, through organisation of events. Modern design solutions incorporated in serviced offices and co-working spaces are likely to lead to increased spending on office fit-outs by traditional office tenants wanting to provide an equally high-quality work environment for their future staff. Changes resulting from the co-working revolution also pose new challenges in real estate valuation and investment potential assessment.

Given the growth momentum of flexible workplaces, we may easily overlook how quickly they have changed our approach to office space leasing. Driven by social transformations and technological advancements, companies today expect faster and more flexible solutions. The office leasing market is now completely different from that a few years ago. Each and every change - just like co-working - disrupts the traditional market model, giving rise to questions and doubts. As long as it is a response to real demand, there is no chance of having it reversed, - adds Jarosław Pilch, Savills.



Table 1. Key office market developments fuelled by the expansion of serviced office and co-working space providers.



 

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