Flexible office space in Dubai to increase rapidly next 5 yrs
Dubai is leading the way in the trend of introducing flexible office spaces in the MENA region, according to the leading, global real estate consultancy JLL. This sector is set to continue to increase rapidly over the coming years. It currently accounts for less than 1% of total office stock, a figure that could increase to around 5% by 2022.
A new report titled ‘Disruption or Distraction’ launched globally by JLL today, notes that the amount of flexible space in the 20 largest office markets grew by 30% in 2017 alone. With flexible space operators now targeting large established corporates, in addition to their traditional focus on freelancers and start-ups, this concept has the potential to disrupt the office market as we currently know it.
Dubai stands out in the MENA region, with 55 projects offering around 70,000 sqm of flexible office space. However, this sector is still relatively small, accounting for less than 1% of the total office space in Dubai, compared to over 3% in key office markets across Europe.
Who is ruling flexible office?
The flexible office market in Dubai is currently dominated by two types of operators, international serviced office operators and landlords, particularly hailing from free zone authorities. The major international operators include Regus, ServCorp and My office, that between them operating from 25 locations in Dubai supplying around 27,000 sqm of space.
Dana Williamson, Head of Offices & Business Space, JLL MENA, commented “Dubai is set to embark on the global trend of flexible office spaces, one of the biggest shifts in the real estate industry in the wider EMEA region. With the ever-increasing focus from occupiers in MENA on new ways of working, the human experience and cost efficiencies, the need for flexible office space is now stronger than ever. As a firm, JLL is able to advise occupiers, investors and landlords alike, on how to respond to this shifting focus, allowing office markets in our region to continue to support optimal company operations and new business growth.”
Toby Hall, Director – Head of Office and Business Space Leasing – UAE at JLL, commented “We believe that landlords in the region should be considering flexible space as a viable option to counter the effects of increased vacancies as well as providing an amenity corporates and SME’s increasingly require. As regulations are being relaxed in UAE to allow international companies to fully own a business outside of free zones, there is a big opportunity for international workspace operators to enter and grow in the Middle East.”
JLL’s global research recognizes that flex space could account for as much as 30% of some corporate portfolios by 2013 and we are aware of corporates that are seeking to apply similar ratio’s in respect of their space in Dubai.
Key findings of the newly launched report suggest that:
-Globally, the amount of flex space in the 20 largest flexible office markets grew by 30% in 2017 – equivalent to around 1 million sqm.
-Flexible office space will account for 30% of some corporate portfolios by 2030.
-Barriers to flex space adoption include concerns around brand dilution, cost, security, and confidentiality. But similar risks are associated with non-adoption, around staff retention and attraction, as well as being perceived as stale.
-With over 700 flex space providers in the industry, consolidation is inevitable and a downturn would accelerate this process. The well-capitalized and experienced providers with geographical diversification will flourish, as well as innovative and niche operators providing a next-generation offer.
Craig Plumb, Head of Research, JLL MENA commented, “Investors and developers are increasingly adapting to the rise of flexible space in Dubai, by introducing their own concepts or partnering with existing providers. Major Free Zone operators are already including flexible office space, such as Dtech in Dubai Silicon Oasis, Fintech Hub in DIFC and In5 across various Tecom projects. With regulations now easing, more of the future supply now being developed is likely to be offered as flexible office space.”