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Dubai and the Gulf region’s flexible workspace sector could see its business models tested amidst the growth in demand from companies scrambling to maintain business continuity in the wake of Covid-19 outbreak.
Hamish Troon, Head of Commercial Agency – Corporate Solutions of real estate consultancy Colliers Middle East told Zawya that flexibility has been a focal point for a lot of the businesses in the region in recent years.
“The effects of Covid-19 will greatly heighten this as more companies see a need to quickly adapt to differing climate conditions,” he said over email. “Generally, traditional landlords cannot offer the flexible conditions that serviced offices can, and therefore, we see a real push for both expansions of existing clients as well as new market entrants entering into contracts with flexi operators.”
In July 2019, Zawya had reported that the supply of co-working centres in Dubai, from both new market entrants and existing operators, would continue to increase with minimum 320,000 to 530,000 sq ft of space expected to be dedicated toward this sector by the end of 2020.
Following the UAE government’s advice on working restrictions to prevent Covid-19 infections, Regus, the largest serviced office provider in the world, is seeing an increase in small teams wanting to lease space for short-term periods ranging from 2 to 3 months, according to commentary on Covid-19’s impact on the flexible workspace sector issued by Colliers Middle East last week.
“Some, who have leased space, commented that this is their alternative to working from home and is preferred due to the support options they offer,” the report noted.
It said serviced office operator Servcorp told Colliers that they had identified many companies deciding to postpone their 2020 plans electing to stay at their existing locations and possibly holding off any decisions for the remainder of the year.
The report also observed that significantly larger companies are looking to flexi-operators in these times because they offer products that provide safety nets. Regus, for example, has witnessed an increase in global customers enrolled for their disaster recovery products, and who have taken office desk space and IT rack space as back-up options for the coming months, especially in markets like Bahrain, Kuwait and Oman.
Servcorp is offering IT infrastructure that allows their clients to operate their business from home or managed by one of their global centres.
“Many businesses have been unprepared with little or deficient contingency plans in place and faced with staff working from home without the proper tools and adequate connectivity,” the report said.
Business models tested
On the other hand, flexi companies are also facing growing demand for short-term office contracts as many businesses opt to press the pause button on long-term contract commitments.
“We anticipate a shift toward shorter termed contracts with operators, which does mean premium rents but adjustable structures that include options to vacate immediately,” Troon forecasted.
Regus, for example, has set up a new service line of short-term emergency spaces to accommodate satellite teams of clients impacted by disruptive events like Covid-19.
With social distancing becoming the focus of community health response to Covid-2019 globally and expected to remain so for a considerable amount of time, Troon said flexi operators have been focusing on improving conditions and support facilities for employees to work remotely.
However, if flexi-office spaces and remote working become widespread in the long-term, what would be the impact on the traditional office sector?
Troon said there would always be a need for traditional office space, but the change in dynamics is likely to result in reduced floorspace per worker.
He continued: “Companies will no doubt evaluate business plans and their required footprint and so Colliers anticipate a high emphasis on workplace strategy as size reductions start to become the norm. The global commercial average is one person for every 12 square metres; however, given the predicted increase of flexible working, this average is looking likely to decrease.”
The Colliers report called upon businesses to have back-up options around flexible working.
“This then influences how teams are managed and the costs involved. As there has been significant disruption, we foresee corporations will now be forced into reviewing their flexible working strategies to ensure they are adequately equipped in the future,” the report concluded.
(Reporting by Anoop Menon; Editing by Mily Chakrabarty)
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