Huge demand for Auckland co-working space
Generator’s trendy and funky character co-working space in Britomart, Auckland. Photo / Supplied
The Auckland office area occupied by co-working space has almost doubled in just 12 months, according to a new Bayleys Research report.
The new analysis shows there is more than 28,000sq m of co-working office space in Auckland - up from 15,000sq m last year.
Lloyd Budd, director commercial, retail and operations at Bayleys, presented the latest research findings to CoreNet members, an association for corporate real estate professionals this month, at Auckland’s newest purpose built co-working premises - GridAKL/12 Madden Street in Wynyard Quarter’s Innovation Precinct.
Co-working – the renting of shared office space and facilities – has long been the norm for tech start-ups and creative companies. But the concept is now also attracting a more diverse range of corporate tenants seeking to tap into the start-up culture, cultivate innovation and win new talent and clients.
The new Bayleys report shows the number of co-working members has increased from around 1500 to 3300 with 76 per cent of the space operated by two companies – Generator and BizDojo – and 17 other operators making up the balance.
“An additional 14,500sq m of co-working space will be up and running by 2018 with 11,000sq m contained within the B: Hive building at Smales Farm in Takapuna. Kiwi Property Group has also announced that its new office development at Sylvia Park will have a full floor occupied by operator BizDojo.
“In addition, the Regus company, Spaces, has signed up to 2700sq m at 501 Karangahape Rd which will push the total number of co-working members to just under 5000 by 2018,” says Bayleys Research.
Most of the current Auckland co-working space is centred in the Auckland CBD and city fringe - with the largest cluster in and around Waitemata harbour close to a wide variety of amenities and public transport connections.
The report notes that in Auckland, the average monthly desk rate is around $800 for quality dedicated co-working space, but the market ranges from $400 per month to $1499 per month - depending on the menu of services, location, quality, facilities and other factors. Density in office space occupied by co-working members has also increased over the past year - from a ratio of one member per 10.3sqm to one per 8.6sqm, a 17 per cent increase in floor space efficiency.
Most Auckland co-working space is centred in the CBD and city fringe. Photo / Supplied
Budd says most of the larger co-worker property operators are looking to expand their offerings and believes there is considerable scope to broaden the current reach from the ‘entrepreneurial-creative’ sectors to the more lucrative corporate sector.
“For the corporate sector, working alongside energetic start-ups and techies gives them direct access to a customer base and ideas that might otherwise be out of reach,” Budd says.
The latest example of the co-working sector’s growth is Generator’s offering its newest 8000 sqm lease deal at Grid AKL/12 Madden St where the head lease holder is Auckland Tourism Events & Economic Development (ATEED).
Generator is owned 50 per cent by Precinct Properties and the building is also owned by Precinct.
This makes Generator the largest co-working operator in Auckland. BizDojo is the second largest sector landlord in Auckland, but the largest overall in New Zealand. It also operates in Wellington and Christchurch, and has recently announced a new site at 5 Mile in Queenstown.
Auckland Mayor Phil Goff said in June this year that ATEED’s GridAKL initiative – part of the wider Auckland Innovation Precinct in Wynyard Quarter – showed that co-working was playing an important role in driving growth of the region’s technology sector, with 9000 jobs added in the last five years and nearly 26 per cent growth in the tech sector’s gross domestic product (GDP).
Budd says the “millennial demographic” is the key driver underpinning co-working floorspace growth.
“Over the next five years, millennials will be the fastest growing age demographic – contributing about 70,000 people to Auckland’s workforce,” he told the more than 120 attendees at the CoreNet event.
“Conservatively, the demand for co-working space could potentially rise more than eight-fold over this period if current global trends continue.”
Lloyd Budd of Bayleys.