Viewpoint | Adaptive Spaces
Starting a Conversation about Flex Space, Optionality, and Property Value
February 27, 2024 5 Minute Read
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For decades the funding, development and leasing of office buildings in Asia Pacific and indeed elsewhere has proceeded in the same time-honoured fashion. Investors, banks, or other lenders supply the capital; the developer uses the capital to construct the property; and the resulting office space is leased to tenants, usually on a long-term basis as loan providers prefer stable and predictable sources of income.
On the demand side, there has been a prolonged historical trend for office-using industries in North America, Europe and Asia Pacific (except for a select few markets where shorter leases are the norm, such as Hong Kong SAR) to commit to long-term leases ranging from five to ten or even more years, backed by a strong conviction and feeling of certainty in what their business needs will be in the short-, medium-, and long-term future.
Recent years have seen demand from the tenant side become considerably less predictable, however, as the adoption of flexible working prompts companies to re-think their space requirements.
The volatile economic environment is also leading companies to experience a faster pace of change, prompting many firms to implement sudden increases or decreases in headcount, which is inevitably impacting their office space needs.
This viewpoint delves into how occupiers’ needs are evolving and creating greater demand for lease optionality and flex space and amenities, and how these trends could impact office building valuations.
Contacts
Sidharth Dhawan
Executive Director, Head of Alternatives, Asia Pacific
Danny Mohr
Head of Valuation & Advisory Services, Asia and Head of International Valuations, Asia Pacific
