Serviced office operators are facing several problems as the global economy continues to deteriorate.
Rising inflation has already affected businesses, with product prices, wages and rents higher than last year.
'Inflation makes everything expensive,' says Andy Chong, managing director of OneStart. 'Rents in Central [went up] by 50 per cent in 2010. It is hard to expand our business.'
Demand for serviced offices has fallen in recent months, he adds, as clients feel insecure amid economic uncertainties and are adopting a wait-and-see attitude.
'Business has fallen in the last three months,' Chong says. 'When I talk to some of my clients, they say it is impossible to do a business forecast; many business plans will be delayed or even stopped.'
While the demand for serviced offices is weakening, there has been an increase in supply as more players enter the field which, up to now, has been profitable. New entrants are likely to offer cheaper prices in an attempt to gain market share, putting established players under pressure.
Lachlan Sloan, group director of Compass, believes the demand for serviced offices in the first quarter of next year will be moderate.
