Singapore occupiers shifting towards flex leases

Colliers Singapore’s Bastiaan van Beijsterveldt spells out the advantages and implications of this growing trend of flex leases.

Flex leases are gaining popularity among tenants in Singapore, according to the latest Colliers Global Occupier Outlook report, which shows a growing number of companies transitioning from traditional leases over the next five years.

Bastiaan van Beijsterveldt, managing director at Colliers Singapore, emphasised the significance of this trend when interviewed by the Singapore Business Review recently.

“Almost every client currently is looking at how they use the office and how that translates into their footprint. Many are seeking more flexibility due to the changing way offices are being utilised,” he said.

The report reveals that occupiers now are interested in having greater control over their office space and exploring options beyond traditional lease agreements. This may involve taking up additional space or having the flexibility to adjust the leased area during the term.

While the exact number of companies embracing flex leases remains uncertain, the report highlights the widespread focus on optimising office usage in Singapore based on the evolving needs of the workforce.

However, Van Beijsterveldt also acknowledged that opting for flex leases may result in a loss of personalisation and identity for occupiers. Unlike traditional office spaces tailored to individual tenant requirements, flex spaces offered by service providers often come with pre-fitted designs that cater to multiple tenants.

“Generally, when you look at a traditional office space, and it’s completely fitted out to the requirements of the individual tenant, it’s very personalised. But if you go to a service provider, it’s already faded out in a certain style. And you’re basically one of many tenants on that floor,” he said.

The study conducted by Colliers Singapore also highlighted the uncertainty surrounding the future of hybrid work as a factor driving demand for flex leases.

Van Beijsterveldt said many occupiers are hesitant to make long-term decisions due to the evolving nature of work arrangements and business growth projections. Flex leases provide occupiers with the necessary flexibility to adapt to changing work dynamics and enable them to establish satellite offices or smaller workspaces closer to employees’ homes.

When considering the feasibility of flex leases in Singapore, he pointed out that the market already has a healthy supply of flexible office space providers.

However, the smaller size of Singapore and its efficient public transport and road systems make the concept of satellite offices less prevalent compared to larger cities. Occupiers in Singapore often prefer centralised main offices to foster collaboration with colleagues. Nevertheless, the demand for flex leases remains robust in the city-state.

The Colliers executive also emphasised that the suitability of flex leases extends across various industries and organisations.

“So when we work with clients, there’s not really [an] one-size-fits-all approach, even if you look at it on an industry level,” said Van Beijsterveldt, noting that specific organisational needs and departmental requirements must be taken into account.

“You really have to look at the granular level; take into account the city, the country… also the demographics,” he added.

In terms of designing flexible office spaces, he recommended conducting workplace studies to gauge the present and future office usage patterns. This data-driven approach enables occupiers to incorporate the desired level of flexibility into their office design.

These elements may include informal meeting points, open spaces, and adaptable furniture can facilitate changes in space allocation as the organisation evolves.

Finally, he advised occupiers to negotiate with landlords for increased flexibility within traditional lease agreements. This could include provisions for expansion, downsizing, or early termination if necessary.

“What can the landlord-tenant partnership basically deliver? And how can we work together, both getting to the material requirements of the landlord or the easier requirements of the landlord, but also of the tenant?” Van Beijsterveldt said of what relationship to establish.

By fostering a partnership mentality between landlords and tenants, both parties can benefit from a mutually advantageous relationship that aligns with sustainability goals and addresses future needs.

“So really looking more at the landlord-tenant relationship as a partnership, rather than landlord and tenant,” he said.