Thought Leadership

• Flex operators returned to growth in H2 2021 as an uptick in leasing volume brought an end to a phase of consolidation.

• Cautious growth is expected to continue in 2022 amid an increase in enterprise demand from tech firms and business services companies. Interest is also growing among financial companies, life sciences and consumer product firms.

• In response to evolving occupier demand, flex operators are increasingly providing a more diverse space offering, with changes being made to pricing models, centre networks and technology.

• Landlords are becoming more involved in providing flex options in their properties as traditional landlord-tenant approaches give way to partnerships, management agreements and owner-operator models.

This report was originally published in https://apacresearch.cbre.com/en/research-and-reports/Asia-Pacific-Report---Asia-Pacific-Flex-Space-Market-Bounces-Back

With the pandemic now well into its third year, most markets in Asia Pacific have adopted a policy of living with COVID-19 as high vaccination rates, effective medical care and the emergence of weaker variants reduce the severity of the virus and remove the need for lockdowns and other related measures. The findings from CBRE’s 2022 Asia Pacific Occupier Survey, which was conducted from March-April of this year, reflect this new paradigm.The report identifies and explores the five key real estate priorities for Asia Pacific occupiers in the post-pandemic era:

• Adopting Flexible Working as the New Normal
• Refining Workplace Strategies and Policies
• Augmenting Office Wellness and Sustainability
• Facilitating a Return to the Office
• Pursuing Long-Term Portfolio Expansion

The report also highlights the challenges that companies will need to address during this period of transformation.

• New data centre supply in the four tier I Asia Pacific markets (Greater Tokyo, Sydney, Singapore and Hong Kong SAR) totalled 305MW in H2 2021. This marked the highest total for a six-month period since CBRE’s records began. 
• The record volume of new supply pushed up net absorption in the four Asia Pacific tier I markets to over 280MW in H2 2021. Hyperscale cloud providers remained the main demand driver, with many groups exhibiting requirements for bigger facility sizes and multiple-site deployments.
• Asia Pacific direct data centre investment turnover totalled US$4.8 billion in 2021, an increase of over 100% from the previous year. Data centre operators completed several acquisitions; capital-raising remained strong; and more investors are setting up operational platforms.  
• Large populations of internet users, solid economic growth, government support for industry 4.0 and 5G development continue to drive interest in data centre development in emerging Southeast Asia, with Indonesia and Malaysia the largest markets at present.

Within the office sector, occupiers can focus on higher-quality assets that possess green and sustainable features and establish a roadmap to adopt an ESG agenda from green buildings to energy audits, to green leases. Meanwhile, landlords can invest in smart and green buildings, including retrofitting older stock and prepare for new ESG requirements by embedding sustainability into every stage of the building life cycle. In the industrial and logistics sector, a paramount trend to watch is the sharper focus on ESG criteria, evident from 67% of occupiers believing that green or sustainability features will be more prominent in logistics facilities in the future in CBRE’s 2021 APAC Logistics Occupier Survey.

This report was originally published in https://apacresearch.cbre.com/en/research-and-reports/Asia-Pacific-Real-Estate-Market-Outlook-2022