Space war heats as global co-working giants go toe-to-toe in battle for Brisbane’s office market

On the frontline of Brisbane’s burgeoning flexible workspace sector, the fight to gain new ground is heating up between international powerhouse IWG and its rock star rival WeWork from the US.

Brisbane’s office market is the new battleground for the global co-working giants.

THE battle of the global co-working giants is just beginning in the resurgent Brisbane office market.

On the frontline of the city’s burgeoning flexible workspace sector, the fight to gain new ground is heating up between international groups such as IWG, formerly Regus, and its rock star US-based rival WeWork.

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Thousands of square metres across the CBD and city fringe are already under their control.

But over the next 12 to 18 months, it is expected the co-working big guns will further expand their footprints.

Every square metre will count as they strategically position themselves in the market.

It is understood both IWG and WeWork have more major deals in progress, while other players, including Christie Spaces and Hub Australia, also are “in the game” as the market catches on to the co-working growth in Sydney and Melbourne.

Office Hub’s Grant Philipp.

“Brisbane is the place to watch … it will be a battleground,” said Grant Philipp, the founder and chief executive officer of online co-working website Office Hub.

Mr Philipp said the rapidly expanding footprints of the major co-working operators would inevitably result in them “effectively dumping thousands of desks, a crazy number of desks, into the game” in Brisbane over the next 12 to 18 months.

“The competition is going to be pretty fierce as more stock hits the market and everybody fights it out to fill it up quickly … we predict there will be a softening in pricing of up to 15 per cent that will spur on deals.”

Mr Philipp said Brisbane had been a tough co-working market to crack with slow uptake but it seemed to have “turned a corner” over the past six months.

“Definitely, the mood has changed and we’re seeing a pretty significant uplift in inquiries into Brisbane for co-working space,” he said.

US-based WeWork is one of the co-working giants expanding its footprint in Brisbane.

New research in Office Hub’s The Australian Coworking Market Report 2018-19 indicates reduced workspace rates had led to a shift towards co-working and flexible office space sector in Brisbane.

“Brisbane’s burgeoning flexible workspace sector experienced strong growth this year as enhanced supply brought rates down and encouraged uptake throughout the market,” the report says.

“Greater demand, more signed contracts and a larger average size per rental indicate positive growth in this relatively green market, while the contrast of the 5.72 per cent fall in average contract value suggests a lower price point could have been the motivation Brisbane’s price-conscious occupiers needed to shift to flexi solutions.”

The research found overall there had been a 41 per cent increase in flexible workspace supply nationally in 2018-19.

Brisbane is the market to watch as it catches on to the co-working growth in Sydney and Melbourne.

According to Knight Frank’s latest Brisbane CBD Office Market Overview, the co-working and serviced office sector accounted for 6 per cent of total leasing activity in 2018 and 2019.

“The commitments by these co-working and serviced office tenants are all contributing directly to net absorption,” said Knight Frank joint head of office leasing, Mark McCann.

WeWork’s leasing spree so far has included 7700sq m at 310 Edward St, 4600sq m at 260 Queen St in the CBD and 4800sq m at 25 King St, Bowen Hills.

Co-working office space has emerged as a key driver in Brisbane’s leasing market.

Independent valuer and adviser, m3property’s latest Inner Brisbane Office report says co-working and other flexible office space providers had emerged as a key driver in the city’s office leasing market.

“We have seen leasing activity strengthen over the past year and that has been driven by governments, the continued expansion of the co-working and flexible office space sector, and construction and engineering firms involved in major projects, as well as general growth in white collar employing industries,” said the group’s Queensland research director Casey Robinson.

Mr Philipp said although it was still evolving, the co-working “juggernaut” was here to stay.

“There is no going back now,” he said. “And rightly so, because people want choice and they want flexibility.”