CGT change driving boom in businesses turning to flexible and serviced office spaces

Australia's proposed capital gains tax (CGT) changes are having an unexpected ripple effect well beyond the property market, with businesses becoming increasingly reluctant to commit to expensive office fit-outs and long-term commercial leases.
 

According to Brett McAllen, CEO of @WORKSPACES, uncertainty surrounding the economy, taxation and business confidence is driving a sharp increase in enquiries for serviced offices and flexible workspaces as companies look to reduce risk and preserve cash.
 

"We're seeing a noticeable shift in business behaviour," McAllen said.
 

"Businesses are asking themselves a very simple question: why spend hundreds of thousands of dollars fitting out an office and locking yourself into a five or 10-year lease when the economic landscape is changing so quickly.  The other consideration is increased taxes on business sales.  
 

"Many businesses are not prepared to grow value beyond a certain point when the sale will attract more tax than ever before.  It is a bad problem for innovation, jobs and investment but it is having a positive impact on flexible workspaces."
 

McAllen said the uncertainty and business negativity created by the government's CGT changes is making many business owners far more cautious.
 

"Whenever governments make significant tax changes, businesses naturally become more conservative. Cash becomes king and flexibility suddenly becomes incredibly valuable," he said.
 

The death of the traditional office lease
 

For decades, securing long-term premises was viewed as a sign of business success however McAllen believes that mindset is rapidly changing.
 

"Five years ago, many businesses proudly signed long leases because it showed stability.  Today, many see long leases as long-term liabilities," McAllen said. 
 

He said committing to commercial rent, expensive fit-outs, furniture purchases, technology infrastructure and ongoing maintenance has become increasingly difficult to justify.
 

"Business owners are saying they'd rather invest their capital into other things than tying it up in office infrastructure," McAllen said.

The hidden cost of setting up an office
 

McAllen said many businesses underestimate the true cost of establishing traditional office space.
 

"It isn't just rent.  It's office furniture, reception areas, meeting rooms, kitchens, internet, cleaning, utilities, security systems, repairs, coffee machines, printers, end-of-trip facilities and ongoing maintenance," McAllen said. 
 

"Before you've employed your first staff member, you may have already spent hundreds of thousands of dollars."
 

"Serviced offices eliminate much of that financial burden.  You simply move in, turn on your laptop and get to work."
 

Businesses choosing flexibility over risk
 

McAllen said businesses are becoming increasingly focused on protecting cash flow.
 

"Nobody knows exactly what the economy will look like over the next few years or how the CGT changes are going to flow through to share of wallet," McAllen said. 
 

"Businesses want the ability to grow, contract or relocate without being trapped by expensive commercial leases."
 

He said flexible workspace agreements provide businesses with significantly greater agility.
 

"If your team doubles, you can expand and if it shrinks, you can reduce your footprint.  Traditional leases simply don't offer that flexibility," McAllen said. 
 

Confidence falls, enquiries rise
 

McAllen said enquiries across @WORKSPACES have increased as businesses reassess their property commitments.
 

"We're speaking with more businesses than ever that are exiting conventional office leases or deciding against signing new ones," he said.
 

"They're looking for premium office environments without taking on unnecessary financial risk.  The appeal extends from start-ups through to established professional firms.  This isn't just small business, we are seeing law firms, accountants, consultants, technology companies and larger corporate teams all making the same decision."
 

A smarter way to invest
 

McAllen believes the changing business landscape is accelerating a long-term trend towards flexibility.
 

"Businesses have become much more disciplined about where they deploy capital," he said.
 

"If you've got an extra $300,000 available, most business owners would rather invest it in staff, marketing, technology or acquisitions than office fit-outs."

He said serviced offices allow businesses to redirect capital into activities that generate growth.  Your office should support your business, not consume your capital.
 

The workplace reset continues
 

McAllen believes Australia's office market is entering a new era.
 

"The proposed CGT changes may be aimed at investors, but they're also influencing business confidence more broadly," he said.
 

"When confidence softens, businesses naturally seek lower-risk operating models."
 

He believes serviced offices and flexible workspaces have become one of the simplest ways for businesses to reduce exposure while maintaining a premium professional presence.
 

"The businesses that thrive over the next decade won't necessarily be the biggest," McAllen said.
 

"They'll be the most agile. Right now, flexibility is becoming one of the most valuable business assets any organisation can have."
 

About @WORKSPACES

@WORKSPACES is a premium, Australian-owned flexible workspace provider delivering enterprise-grade, on-demand office solutions across Australia. With locations in Melbourne, Brisbane and the Gold Coast, the company offers serviced offices, coworking environments, virtual office solutions and meeting facilities designed to support modern businesses.

Led by CEO Brett McAllen, @WORKSPACES is focused on delivering high-quality, flexible and scalable workspace solutions that enable organisations to operate efficiently and competitively in a rapidly evolving business landscape. For more information, visit: www.atworkspaces.com.au