There’s a new app on the way that could shake up the office rental market and residential sales markets alike, but the soaring demand for Office Hub services probably signal things are not all good in corporate land.
Grant Philipp’s business Office Hub offers co-working office space. He says in recent times it’s gone gangbusters. He’s got a new app soon ready to launch that will offer detailed information on tenants and landlords including the ability to rate service and value for money (a residential sales version of the app is on the way) plus demand for his co-share office space has jumped in the first few weeks of the year.
The first two weeks back after Christmas were the biggest ever in terms of inquiries for his office space letting service, he says. And he’s about to appoint two new staff to handle expansion at home and overseas.
Market demand in the two weeks earlier this month were “off the radar. The biggest two weeks ever, and it’s January.”
“We’ve had 65 enquiries on the weekend alone.”
But if you think this growth story means good news for the economy, think again. Philipp’s business is to match surplus space with prospective tenants and what’s been jumping is the amount of space on the market courtesy of landlords direct, or businesses that have overcommitted and need to downsize and cut back on floor space.
“People are downsizing, breaking up their spaces. Maybe they’ve got excess space and have laid off some staff. But they’ve got the rent to pay so we just help them rent the space.”
The company has about 1500 locations throughout Australia – nearly double the number at this time last year, with each between 1000 square metres and 1500 square metres in size, with occupancy trending at about 85 per cent, he says.
“This year we are booking flights to Indonesia, China and India to add another 1000 sites.”
There’s no particular industry sector that’s prominent in offloading space, he says. “We profile every company based on industry and there hasn’t been a shift in any particular industry suffering more than others.”
Some though is probably from entrepreneurs “who might have been looking to expand or expecting to do so and now see the challenges are harder than they anticipated. It could also be some of these guys coming off the back end of being retrenched or laid off.”
Other noticeable sectors include technology and allied health.
The app will be one big Tinder-like dating site for business and no “Kinder surprises”
But it’s on the app, named Abacus, that Philipp is most upbeat. There is “so much fun coming that’s going to disrupt this game,” he says. Especially, on the resi side. And it’s time.
The industry is ripe for challenge, he says. “It hasn’t changed; everyone is still doing the same things every day.”
He expects people will find the resi version of the app particularly interesting. Much of the detail is still under wraps but among its many features will be the ability to pick up huge amounts of information using social media, “from what kind of dog they have to their kids’ names”.
“It will grab all their social profiles, Instagram’s, what schools they went to, their avatar photos, their bios, and we will be able to pull all that information together.” It will all be used to match preferences to available products.
His team will also be able to manage campaigns for owners.
“Our guys will be sitting in airconditioned offices following up.” And yes the company holds a real estate licence.
The commercial side of Abacus, in beta testing now, will give owners insights “like they’ve never had before”. This will include credit checks on tenants and if they are likely to be a good cultural fit.
Tenants, on the other hand, will be able to rate landlords on how their space measures up to the promises, if the asking rental bears a close resemblance to the rent advertised (often it doesn’t, Philipp says) and what the overall value for money is. They will be able to upload the photos and videos and then rank the space.
Information on tenants and landlords alike will be collated and end up in a big “Tinder” dating site for office space, he says.
The database is already at nearly 40,000 spaces across Asia and Australia.
“And we will have this amazing database and insights into who thinks spaces look good or bad and whether the team is helpful or not.”
“We’ll have more answers than anyone in the world.”
So what do the owners think?
Philipp confesses the app can be pretty confronting for some people.
“Most of them are very positive about it because of the insights and the knowledge they’re getting. Some are scared about it because it makes public whether the space looks good and whether their team did a good job.”
Landlords might think their space is “amazing and beautiful” but then they start to get low scores and think, “what’s wrong with those people?” But the app provides quantifiable evidence, he says.
And it will go a way to revealing the truth about what’s on offer – including the price, which is often misleading and deceptive, he says.
“Normally it’s double what’s advertised. We’re bringing transparency back to the game.”
It’s about not wasting the tenant’s time. And about not finding any little “Kinder Surprises”.
What the data says:
Research supplied by Office Hub based on multiple sources finds:
- The amount of coworking space around the world has risen by more than 20 per cent in the last year
- there are more than8 million coworking members around the world
- Coworking spaces will rise to8 million by 2020
- There 384 managed workspaces in Australia, a rise of 24 per cent from 2017 to 2018.*
- 49 per cent of workspace demand in Australia is in Sydney CBD and Melbourne CBD.*
- 64 per cent of workers in flexible workspaces are aged 25-44.*
- Professional services, IT and digital are the key industries using flexible workspaces in 2018.*
- 70 per cent of workspace demand is for private offices over open plan desks.*
- 4 per cent of all employment in Australia will be associated with flexible workspaces by 2030.**
- The total contribution of flexible workspace and remote working in Australia is set to be a total of $231 billion by 2030.**
- Flexible working could save 5.9 million of tonnes of carbon emission per year.**
- 26 per cent of startups worked from a commercial office in 2018 while 71 per cent utilised flexible workspaces.
- 24 per cent of startups plan to move office accommodation in the next 12 months; 4 per cent intend to renew a lease.
The average monthly cost of single-person flexible workspaces in Australian cities:
- Sydney – $677 (-5.45 per cent on 2017)
- Melbourne – $558 (-10.15 per cent)
- Brisbane $645 (-24.39 per cent)
- Perth – $596 (-12.48 per cent)
- Adelaide – $480 (-18.23 per cent)
- Canberra – $858 (+39.97 per cent)
- Hobart – $722 (-28.80 per cent)*
*The Australian Coworking Market Report 2018, Office Hub.
**Development Economics report commissioned by Regus, 2018.
***Startup Muster Report 2018.