Global corporate occupier activity registered a strong start to 2018, despite signs of slowing absorption in the U.S. Corporate location expansions and the co-working sector accounted for much of the activity across the globe, and corporate sentiment remains positive as firms continue to battle for top talent and high-quality space.



Corporate occupiers sharpen their focus on location strategy as talent availability tightens

The tight availability of labour is influencing corporate occupiers’ location strategies. In the U.S., Amazon and dozens of other firms are considering major moves and expansions in markets with affordable, high-quality talent. However, while tech firms are engaged in notable activity in select markets, the U.S. recorded its lowest first quarter of net absorption since 2010, at 3.7 million square feet, as talent shortages become more acute.

Technology firms in Asia Pacific are also continuing to expand, with many shifting toward multiple operations hubs in lieu of a heavy concentration in one market as they seek talent and space. Aggregate leasing volumes for the top three Tier One cities in Mainland China were up 60% in Q1 2018, with the technology sector propping up much of the demand in Beijing in particular.

Co-working activity accelerates as the world of work changes

Employee attraction and retention are increasingly playing a key role in site selection. This requires firms to accommodate their employees’ work and life preferences to improve productivity and well-being, with amenities of higher quality than in prior cycles. A primary driver of this phenomenon is the acceleration of co-working and shared space.

In Asia Pacific, leasing volumes from co-working operators rose 50% year-on-year in the first quarter, boosted by WeWork’s recent acquisition of Naked Hub, one of the region’s largest co-working operators. In the U.S., WeWork executed 33 leases during Q1, while Spaces signed 34 leases totalling 1.3 million square feet.

The co-working and flexible office space sector also continues to grow in Europe. The dynamic workforce and alternative models of employment associated with the ‘gig’ economy account for 30% of the workforce in some European markets, and these trends are expected to continue throughout 2018 as firms adopt co-working space in their real estate strategies.

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