Market Trends of UAE Flexible Office Space Industry
This section covers the major market trends shaping the UAE Flexible Office Space Market according to our research experts:
Increasing Demand for Commercial Working Space
The area of commercial working space in Dubai, in the United Arab Emirates (UAE), will reach 9.18 million square meters in 2021. The area in 2019 was recorded at 8.74 million square meters. One Business Centre (OBC), a company built to inspire entrepreneurship success by providing company formation, private offices, and coworking spaces in Dubai, has recently witnessed a profound transformation in its clientele demographic and is even planning to expand its current space to 100,000 sq ft by the end of 2023. The industry association has revealed that the demand for Grade A office space is continuing to rise, along with occupancy levels. It also revealed that office rents in the UAE's two largest business hubs, Dubai and Abu Dhabi, remained resilient over the quarter.
Office rents in Dubai are rebounding for the first time in six years, rising faster than in New York or London. During the second quarter of 2022, the value of office rentals in the city rose for the first time since early 2016. Prime office rents rose 7 percent in the year through June, while rents for grade A space increased by 7.2 percent. At the other end of the spectrum, lower-grade workspace rose 3 percent, according to CBRE Group. Average Prime and Grade A rents in Abu Dhabi fell by 6.9 percent and 1.1 percent, respectively, whereas the Grade B segment of the market saw average rents increase by 4.5 percent in 2022.
With demand for office space rising, rents have also gone up, particularly in popular business districts such as Sheikh Zayed, where leasing rates rose by 35 percent in Q1 2022, One Central (29 percent), Business Bay, Jumeirah Lakes Towers (29 percent), and Downtown Dubai (16 percent). Office units with a combined 480,000 square feet of space were delivered during Q1 2022, bringing the city's office supply to 107 million square feet.
Co-working Spaces are Witnessing Significant Growth
Furthermore, co-working spaces facilitate different kinds of interaction, opening opportunities for networking, collaboration, and idea exchange in a way that cannot necessarily be replicated in a conventional office environment. These factors are driving the growth of the market. Dubai is leading the way in providing co-working spaces in the UAE. In addition, co-working spaces in Dubai offer well-designed working spaces with modern decors at affordable membership prices. Some of the major co-working spaces in Dubai include Astrolabs, which offers co-working spaces for USD 408.38 per month, followed by Regus, The Co-Dubai, Nook, etc.
Co-working spaces are becoming the places where startups, new entrepreneurs, and small and mid-sized businesses (SMEs) like to work the most. The Bureau Business Center, referred to as The Bureau, focuses on creating an environment that supports women within the entrepreneurial and startup worlds and officially opened the UAE's first female-focused coworking space in the heart of Dubai in January 2023. Located in Dubai's Gold & Diamond Park, The Bureau features all the makings of a classic coworking space, including lounges, meeting rooms, and private offices, but it goes further to support each member's experience as a woman in business.
The pandemic caused restrictions and policies to keep people away from each other in the office sector, but the sector is now getting better. Co-working spaces are becoming the place where startups, new entrepreneurs, and small and mid-sized businesses (SMEs) like to work the most. During the forecast period, one of the main reasons for the growth of co-working spaces is likely to be the rise in the number of SMEs and startups in many different industries.
