The trend towards collaborative work in Australia continues to gain ground as groups take larger office spaces in the form of whole buildings. This, however, could pose a threat to the owners of office towers, experts said.
While the phenomenon of collaborative work kept vacancy rates low, the joint work groups seemed to have gone too fast in occupying large spaces, said Michael Cook, group leader at Investa.
"The idea of ​​WeWork or any third-party vendor taking 10,000 or 20,000 square meters has not proven itself, especially in Australia. United States or Europe, where you have tenants of 100,000 or 200,000 people.-Square meters, but this does not necessarily apply to the Australian market, "he said at the Australian Financial Review.
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WeWork, a supplier of collaborating spaces, will lease a 10-storey building in Barangaroo, Sydney, covering more than 10,000 square meters. It is also planned to sign a lease for an entire tower at 55 Market Street. This 22,000 square meter space is the largest transaction of the group to date. WeWork also plans to have a 15,000 square meter space in a Melbourne tower.
"In five years, if WeWork achieves the expected growth and profitability, everyone will be happy.For the moment, the strength of the alliance is a bit debatable, however, some homeowners are willing to take that risk "Cook said.
These large-scale agreements could pose enormous risks to homeowners, especially if the groups are not able to utilize the spaces, said Kernel Property Manager Steve Urwin.
"If they can not occupy the space, they can not pay the rent, which is why many of these operators who work together subscribe to each of these leases with a vehicle If a center is not doing well, they will let it fall back and they will move away from it, "he told AFR.
It seems that Sydney and Melbourne are already experiencing an overabundance of coworking spaces, Urwin said. However, looking on the other side of the coin, he said that it made sense that the owners enter into an agreement with the tenants who peddle their coworkers to transfer the risk.
"Otherwise, they would look at the barrel of agreements worse than those," he said.
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