Fixed lease fatigue – businesses head to flexible work hubs
Of the many outcomes of the pandemic was the highlighting of the inflexibility of long-term lock-in lease contracts for office spaces. Indeed, since the world has recovered from COVID, many businesses have seen the light and are abandoning the traditional notion of a fixed lease office space rental in favour of more flexible, scalable office leasing agreements.
Newly appointed CEO of @WORKSPACES Brett McAllen, who took on the role in 2023 to navigate the business through its global expansion program, stressed that businesses are following the worldwide trend towards favouring flexibility in contractual agreements.
“Businesses are walking away from long term fixed leases where they have to take responsibility for the fit out, maintenance, upgrades and other property requirements,” McAllen said.
“They don’t want to have to wear the cost of a foyer, kitchen or meeting rooms that sit vacant outside of office hours. They just want to be able to operate their business in an environment where they pay for what they need and the rest is taken care of.
“For this reason, flexible shared workspace hubs are now the golden child of Australia’s business community. This is a trend that is spreading across the world and is now firmly taking hold in Australia. Low risk, high function flexible workspaces are the way to go.
“As the leading provider of premium coworking, private and serviced office hubs across the country and overseas, we anticipated this trend and have already started expanding nationally and globally to meet the needs of businesses transitioning to flexible work hubs.
“It isn’t just start-ups and small to medium sized businesses that are transitioning, we are seeing large organisations, corporate head offices and government departments making the move. Offices are changing as risk appetites reduce.”
The company has a number of flexible workspace sites in premier locations in metro and suburban areas across Melbourne, Sydney, Brisbane, and the Gold Coast, in addition to its overseas locations. @WORKSPACES business centres are designed to provide a wide variety of flexible private and serviced offices, coworking spaces, meeting and conference rooms and collaborative areas.
Flexibility in office spaces
“Flexible workspace hubs offer companies a blend of space options, which gives them the ability to set up their office spaces how they want them based on their needs at the time,” McAllen said.
“They are then able to change their workspaces easily without a lot of cost as they grow and expand or decentralise across other parts of the country.
“All of these benefits come with the freedom of avoiding long term leases, while also having the flexibility to change locations and even scale up (or down) their spaces and services as needed. Without being locked into a typical office lease, businesses are not wasting their rental allocations and can budget accordingly.”
No costly fit-out expenses
“Another huge benefit of moving your office to a flexible working hub provider is that the entire office space has already been fully fitted out and you can move in and start working right away. There is no need to spend hundreds and thousands of dollars on fitting out the workspace or conference and meeting rooms because they’re already provided for,” McAllen said.
“These professionally designed business centres contain options for clients and their visitors to meet and collaborate in spaces already fitted out with the latest presentation technology, and are available on hourly, daily or weekly rates, meaning that your business is only paying for the services when they’re being used. Add to that the convenience of IT support and catering services readily available, and business owners are wondering why they even bothered with traditional set ups in the first place.”
Disadvantages of signing long-term office lease agreements
“Long term leases come with a deadweight of terms and conditions. These complex agreements often result in lengthy negotiation processes that just lead to frustration and time wasted going back and forth when trying to reach an agreement that suits all parties involved,” McAllen continued.
“The lack of flexibility is another drawback that is frustrating to business owners because it denies you the flexibility to move into a different market and expand to a new location if needed. Furthermore, for smaller businesses, signing a long-term lease can even signify a greater financial risk if you’re locked into paying rent for a long time. For smaller businesses, this can be a huge burden because a traditional lease structure locks you in for anywhere between three and ten years.
“Larger businesses want to avoid fit out costs and the stress of dealing with property maintenance and end of lease issues. Business focus is now firmly on agility, sales and business delivery, not long-term office leasing.”
Changing work dynamics
“In Australia, we have a highly evolved work dynamic. Flexible office workspace arrangements recognise that by providing adaptable work environments, they can offer companies enhanced satisfaction. Market sentiment and trends show that flexible work hubs are continuing to enjoy popularity in Australia. This is a clear indicator of companies seeing the value in this model,” McAllen said.
“Businesses are seeking efficiency, flexibility, premium amenities, handpicked centralised locations and the ability to offer their workers good work/life balance options. Traditional office leases are increasingly looking outdated and as a result many businesses are moving from long-haul leases into newer flexible options.”
About @WORKSPACES
@WORKSPACES is a premium service provider of coworking and private office workspaces that are strategically located near fitness centres, parks and dining and shopping precincts, so business clients are able to maintain a healthy work/life balance, and not fall into the sedentary lifestyle associated with traditional offices. Offices are located in CBD and suburban sites across the country.
