Office Space Requirements

Firms Committing 50-60% Of Office Space Requirements

SINGAPORE – Executives of major coworking space operators revealed that hybrid work arrangements still persists, even though more staff have returned to working in the office, reported The Edge on Friday (15 December, SGT).

“Despite the push for a full return to the office, many companies still give employees the option of only working from the office two or three days a week. Thus, it does not make financial sense for them to commit to huge office spaces with long-term leases,” noted WeWork’s General Manager for Australia and Southeast Asia, Balder Tol.

The Executive Centre’s Managing Director of Southeast Asia, Yvonne Lim, concurs. “Office demand is bolstered by the increasing ‘back-to-office’ momentum in Singapore as employers tighten hybrid working policies… But the trend of employers committing only 50 to 60 percent of their workspace requirement and having their employees [embrace hybrid work schemes] is still common,” she said.

Even though WeWork filed for bankruptcy last month, Tol disclosed that there are no plans to exit or reduce the number of its coworking centres in Singapore, as it considers the republic as a globally important market. “This is supported by our strong occupancy, positive adoption of our space and solutions, and most importantly the diversity in companies that we support.”

For 2024, he expects growth for WeWork in the ASEAN region to come from rising corporate property needs from its MNC occupants for half-floor, entire-floor, and multi-floor leases, while start-ups and SMEs with headquarters in its Singapore coworking centres appear poised to tap WeWork’s regional network to scale up their operations by occupying private office spaces.

Meanwhile, Turner & Townsend’s latest Global Occupier Fit-Out Report showed that both refit existing office space and fit-out new workspace remains high in 2023.

“Thus, businesses are being cautious and considered in how they approach this — they require a greater level of visibility on what targeted investments to their real estate needs will cost them,” remarked Turner & Townsend’s Global Head of occupier Nadia de Klerk.

In particular, fit-out costs for Grade-A and high-specification office space in Singapore reached S$3,299 per sq m, while the average fit-out costs for lower-class offices here are around S$2,772 per sq m.

This makes Singapore among the most expensive cities in Asia this year for office refit and fit-out costs, after Sydney (S$3,671 per sq m for Grade A offices) and Tokyo (S$3,965 per sq m). As for rival commercial hub Hong Kong, it posted average fit-out costs of S$2,472per sq m for Grade A workspace.

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