After seven years at Knight Frank, most recently as head of occupier solutions, John Preece has jumped ship to co-work office provider Hub Australia as chief property officer.
His job is to spearhead the company’s expansion nationally, but if recent reports are correct he could be in for a bigger job than expected as offshore companies eye lucrative prospects in the sector and the competition heats up.
This could be an important development in major office trends with strong implications for sustainability. Co-working and short-term spaces may be less likely to replicate the constant churn of fitouts and waste seen in major office buildings as tenants stake their corporate brands, often throwing out the fitout the owner installed to attract a new tenant, not to mention the fitout the previous tenant removed to honour the “make good provisions” in old lease provisions that should by now be superseded.
Hub Australia, one of the first to market with the co-working concept popularised by millennials and start ups, and whose investors now include the Smorgon family’s Sandbar Investments and Wingate, is certainly on the expansion trail.
It recently announced a second site in Melbourne near Parliament House to take its Melbourne, Sydney and Adelaide portfolio to 10,350 square metres, with a second Sydney site on the way.
According to researchers and observers the market is set for major expansion and a shake-up as small businesses and large corporates alike wake up to the benefits and “cool factor” of co-working spaces.
It looks like there will be a race for dominance, played out through competitive rents and swish facilities that hopefully pay more than a passing nod to the sustainability and wellness trend that experts say is sweeping the traditional workplace sector.
- A Fifth Estate/CitySmart Brisbane event, Bring Your Office to Life, on 27 March, will focus expert and audience views on this increasingly important market development
A report on Monday revealed a raft of overseas, mainly Chinese-owned rivals about to pounce on the sector, and yes, offering facilities from the useful such as gyms and media rooms to the fun, such as “happiness team” concierges.
Grant Philipp, founder of the similarly named Office Hub, told Commercial Real Estate, the local market was “still sleeping” and said Chinese operators such as the $1.4 billion Ucommune and Naked Hub, which recently acquired a 70 per cent stake in Australian co-working operator Gravity, would leave the local market behind with upscale offerings.
Philipp said he believed shared space would double in the next three years as greater numbers of small businesses took up the option for flexible space and larger corporates grew their commitment, already at 20 per cent of the market, up from two per cent three years ago.
Knight Frank recently found that co-working space across Australia grew by 62 per cent in the year to mid-2017, driven initially by millennials and start-ups. The sector is now around 200,000 sq m of space, but still less than one per cent of total office space.
Knight Frank associate director of research, Kimberley Paterson, said in a research report late last year that Sydney’s co-working space had grown by 65 per cent and Melbourne by 63 per cent in 2017, but that Melbourne had the largest volume of co-working space at almost 50 per cent of the national total.
Hub Australia was currently number two in the market, behind US-based WeWork currently at 26,260 sq m across five locations in Sydney and Melbourne since its entry in 2016.
With plans to acquire further sites in Melbourne, Sydney and Brisbane, WeWork could soon occupy nearly 45,000 sq m, Ms Paterson said.
Mr Preece said in the report, while he was still with Knight Frank, that average indicative monthly rates in Sydney were $900 per open plan workpoint, while Melbourne and Brisbane rates averaged $650.