Sydney stood out as a top performer in Australia’s flex office market in 2024 so here we take a look at the year’s performance, demand trends, and the emerging dynamics in the city’s flex and traditional office markets.

Flex Market Performance in 2024

Rising Desk Rates Median desk rates in Sydney’s flex market increased by approximately 7% in 2024, driven by a tightening of supply. This trend was especially evident for flex suites below 15 desks, reflecting strong demand and limited traditional market options for these smaller spaces. Sydney’s median desk rate is around AUD$1,000, with premium locations commanding up to AUD$1,300 per desk.

Conversely, larger flex spaces of 16 desks and above saw a decline in supply. This shift indicates occupiers’ growing preference for traditional lease models or spec-fitted suites in this size range. Certain institutional landlords responded to these dynamics by launching hybrid models, such as turnkey suites at Australia Square, catering to teams of between six and twenty people on flexible leases.

Focus on Experience and Design Newer flex centres are increasingly designed with biophilia, colour, texture, lighting, and acoustics in mind, enhancing individual well-being and accommodating neurodiversity. Community-building and collaboration are also key focuses, making these spaces attractive to diverse tenants. Older flex stock without these amenities, however, struggles with occupancy and consequently commands below-average desk rates.

Hybrid Work and Market Advantages The rise of hybrid working models continues to influence leasing decisions. Flex spaces, with their adaptability and short-term lease options, are at a slight advantage compared to traditional offices for occupiers still understanding their post pandemic work arrangements. Economic uncertainty and fluctuating interest rates have further driven demand for flexible arrangements as businesses prioritize cost-efficiency and scalability.

Comparison to 2023 The flex market experienced growth in early 2024 but stagnated towards year-end. Desk prices remained stable year-to-date, ranging from AUD$900 to AUD$1,100 per desk, depending on centre quality. Occupancy rates hovered around 70% to 80% in Sydney’s predominant centres, while overall demand contracted slightly, with a 10% decrease in coworking and flex space inquiries compared to the previous year.

Flex Market vs. Traditional Offices Institutional landlords are embracing hybrid models that merge elements of flex and traditional offices. The launch of tailored spec suites at Australia Square, with 6-month contracts and premium shared amenities and business lounges being a prime example of this. Interest was high as this product appealed to tenants seeking flexibility without compromising on quality.

A notable trend in both markets is a growing divide between premium and secondary offerings. This ties in with the global flight to quality trend across the entire office spectrum where newer, post-pandemic centres like Hub at 44 Martin Place and Work Club at 200 George Street outshine older facilities, offering better amenities and work environments.

Industry Adoption Professional services and tech firms lead the adoption of flex spaces, driven by the need for adaptable and collaborative environments. However, law firms largely prefer traditional offices due to their requirements for cellular layouts and long-term stability coupled with added security measures from a compliance perspective.

Market Leaders and Expansion WeWork remains the largest operator in Sydney, with approximately 9,000 desks across the city, followed by Hub Australia with nearly 3,000 desks. Operators like JustCo and Work Club continue to expand, while Hub Australia’s premium centre at 44 Martin Place, launched in late 2023, has been a standout success.

Desirable Locations The Sydney CBD Core remains the most sought-after area due to its amenities, dining options, and excellent transport links. Barangaroo also attracts strong demand, aligning closely with the CBD Core in appeal and infrastructure despite being in the Western Corridor of the CBD.

Outlook for 2025 Desk rates are expected to remain stable, with a widening gap between older, lower-quality centres and premium coworking spaces. Institutional landlords are likely to expand hybrid flex models, following the success of initiatives like Australia Square. This shift reflects the evolving needs of occupiers seeking both flexibility and premium offerings, while mitigating risk and protecting against evolving workplace dynamics. Another appeal of the flex market is that it is increasingly opening up prime and A grade buildings to smaller companies who may not have been in a position to locate in these desirable assets if not for the flex / co-working model.

Further reading:
Australia Offices 2H/2022

Contact us:
Piers Mallitte