A shared-office space business in Sydney’s central business district seems like a good option for this year, due to the high cost of rent in the area as of the first half of 2018.
Colliers International said that the average commercial rent in the city centre costs $1,025 per square metre, which doesn’t include outgoings that are passed on to tenants. These expenses usually include land tax, building insurance, management fees and repair and maintenance costs. These expenses, along with the steep price of rent, are driving more companies to rent outside CBD areas or find a shared office space.
Rental Rates By Market
The net-face rent in the outskirts of Sydney’s CBD costs $675 per square metre during the first six months of last year. This is slightly less expensive than the average rent in Melbourne’s CBD, where it costs almost $700 per square metre. Average rents in Brisbane’s CBD costs $670 per square metre during the same period, while renting an office in the Gold Coast is among the cheapest at $380 per square metre.
While relocating to a place with a lower cost of rent is a practical choice, most companies hesitate to do so since it would mean leaving a place with a well-known zip code. A business address in a prime location benefits a company’s brand. This eventually led commercial real estate landlords and developers to offer flexible offices as a solution.
More Remote Employees
Another factor that drives the prevalence of coworking spaces in the country involves more remote workers. Start-up companies are usually the ones that offer flexible work arrangements to its workers, but this is no longer exclusive to them. For instance, the insurance industry has become more accepting of this concept, despite the sector’s image as a strictly corporate business.
Overall, remote employment has become more common in the last ten years. The International Workplace Group released a report in 2018 that showed that as much as half of Australian workers are remote employees for at least two or three days. This trend will only continue due to technologies that allow people to be reachable, even when outside of the office.
Lack of Office Spaces
A shortage of properties is somehow related to the high cost of rent and the increasing number of remote workers. The low supply of properties, especially in CBD areas, causes rents to be more expensive. At the same time, employers have become open to remote employment to save on operational costs.
This trend has made flexible offices to grow not only in Australia but also in the Asia-Pacific region. In fact, the shared-office segment has expanded at a faster rate in the last 12 months than any other region worldwide.
The high cost of rent, more remote employees and lack of properties have caused a market shift in commercial real estate rentals. Those who plan to capitalise on the high demand should consider a business franchise, which makes it easier to find prospective tenants and suitable properties for rent.