In its current form, according to Grant Philipp, founder of Office Hub, the short answer is yes. But it’s not as bad as it sounds. In a report in the CBD office market, the demand is shown to be greater than the supply in all major Australian centres. The report forecasts a continued increase in rental prices and a fall in vacancy rates.
Although the prospects of commercial property look positive on paper, the reality is that by 2021, co-working spaces and serviced office desks available for lease in Australia’s cities will double, which will unbalance the conventional CBD equilibrium.
The conventional lease is going to struggle in the next few years due to flexible lease terms, expandable space which can be scaled up and down as needed, and zero investment in capital works. As the business world embraces the idea of sharing its commercial space, the demand for conventional floor space will decrease and have a significant impact on incentives and base rates in Australia.
Considering that more than 90% of Australian businesses employ less than 20 people, there is no need for big spaces; therefore making conventional office space more difficult to lease. By breaking large conventional floor space into smaller, flexible spaces, owners have a larger market to provide for.
“As a provider, if you’re not offering quality facilities, flexible terms, short-term options and competitive rates, you’ll quickly become irrelevant and fall out of the market,” Philipp says.
Image source: WOTSO Workspace Adelaide
Article source: https://theurbandeveloper.com/articles/is-the-conventional-office-leasing-model-dead-?
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