Weekend Herald

More flex­i­bil­ity, more choices in the of­fice of the fu­ture

- Business · Investing · Real Estate · Interior Design · Colliers International · Asia · Shanghai · Beijing · Tokyo · Hong Kong · Singapore · New Zealand · Australia · Office Design · Bangalore

Of­fices are ex­pected to re­tain a key role in cor­po­rate cul­ture and real es­tate strat­egy, though with a greater em­pha­sis on re­mote work­ing as well as a re­think on space and premises strate­gies.

That’s ac­cord­ing to The Fu­ture of the Of­fice Space re­search re­port re­leased by Col­liers In­ter­na­tional, which analy­ses trends across Asia Pa­cific emerg­ing from the Covid- 19 pan­demic.

The re­port looks at Auck­land along with eight other core Asia Pa­cific mar­kets — namely Shang­hai, Bei­jing, Tokyo, Hong Kong, Sin­ga­pore, Ban­ga­lore, Syd­ney and Mel­bourne.

Ian Lit­tle, As­so­ciate Direc­tor of Re­search at Col­liers in New Zealand, says Auck­land’s mar­ket is un­likely to be as badly im­pacted as those within many of the re­gion’s other ma­jor mar­kets.

“The re­port fore­casts Asi­aPa­cific’s of­fice va­cancy across the eight core mar­kets to peak in late 2022 at 14 per cent, while we ex­pect Auck­land’s va­cancy to peak a bit ear­lier and at a lower rate of around 11 per cent,” he says.

“The re­port also ranks Auck­land among four cities of the eight Asia Pa­cific core mar­kets that are ex­pected to lead the re­gion’s rental re­cov­ery.

“Rents in Auck­land, Sin­ga­pore, Ban­ga­lore and Mel­bourne are likely to in­crease by about 2- 3 per cent on av­er­age per an­num when spread across the next five years.”

Sam Har­vey- Jones, Col­liers’ Manag­ing Direc­tor of Oc­cu­pier Ser­vices Asia, says the of­fice will re­tain a key role in cor­po­rate real es­tate strat­egy, but some firms will shift to a more di­verse and em­ployee choice- based real es­tate strat­egy.

“This may in­volve a com­bi­na­tion of re­mote work­ing, flex­i­ble workspace and a hub- and- spoke model where the ten­ant re­tains its CBD head­quar­ters, per­haps with a re­duced foot­print, cou­pled with sub­ur­ban satel­lite of­fices.”

Lit­tle notes that in Auck­land many of the same trends could emerge with an in­crease in re­mote work­ing, al­beit that this is likely to be for just one or two days per week and is likely to vary across dif­fer­ent oc­cu­pier sec­tors and teams.

How­ever, main­tain­ing pro­duc­tiv­ity will be a key con­sid­er­a­tion.

“Oc­cu­piers who have in­cor­po­rated a hub and spoke model will also po­ten­tially look to cre­ate more flex­i­bil­ity rather than fixed- point leas­ing so­lu­tions. This could be un­der­taken through greater use of flex­i­ble workspace op­er­a­tors when the time suits, par­tic­u­larly for groups in­volved in short- term projects.

“Oc­cu­piers should also take into con­sid­er­a­tion the of­fice as an an­chor for col­lab­o­ra­tion and pro­mo­tion of cul­ture and mis­sion.”

From an in­vest­ment per­spec­tive, the re­port says there is good value to be found in of­fice as­sets.

In­vestors should con­sider widen­ing their search for prime, core as­sets from tra­di­tional CBDs to de­cen­tralised dis­tricts and busi­ness parks.

They should also con­sider tac­ti­cal part­ner­ships with flex­i­ble op­er­a­tors to at­tract and re­tain ten­ants by ex­tend­ing ser­vices and of­fer­ings. This could re­quire in­vestors to look be­yond stan­dard val­u­a­tions.

John Marasco, Col­liers’ Manag­ing Direc­tor of Cap­i­tal Mar­kets and In­vest­ment Ser­vices for Aus­tralia and New Zealand, com­mented: “For the im­me­di­ate fu­ture, it seems that there will be a bi­fur­cated ap­proach in in­vestor strat­egy in the Asia Pa­cific re­gion in­volv­ing ei­ther core, low- risk as­sets, or op­por­tunis­tic pur­chases of dis­counted dis­tressed prop­er­ties.

“On the pos­i­tive side, we an­tic­i­pate a low- in­ter­est en­vi­ron­ment through the end of next year.”

Lit­tle notes that de­spite some un­cer­tainty and short- term dis­rup­tion to mar­ket con­di­tions from Covid- 19 in Auck­land, low in­ter­est rates are fu­elling in­vest­ment ac­tiv­ity, es­pe­cially for prime prop­er­ties with strong covenants.

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