‘Look before you lease,’ expert advises office occupiers
Recent Colliers research reports recording elevated office vacancy in the Auckland CBD and metropolitan (nonCBD) markets is a win for occupiers searching for accommodation, but stress-testing occupational strategies and decision-making processes is advised before contemplating any major office leasing decisions.
Rob Campbell, director of Strategic Advisory for Colliers, says it is the first time in over a decade that overall vacancy has hit these highs, and a complex set of changes and elevated levels of uncertainty are occurring.
“Office space options are comparably plentiful in some settings, but that can sometimes be a hindrance more than a help, especially given the backdrop of changing work practices and economic conditions,” Campbell says. “The one constant is change, and currently, there is a lot of change to absorb.
“Increasing costs of capital, ESG (Environmental, Social, and Governance), hybrid working possibilities, office space occupation requirements, a cost-of-living-crisis and a tight employment market are just a selection of some of the latest considerations for decision makers.
“Given the regularity of changes occurring, decision makers need to stress test their existing plans and processes to match the ever-evolving environment, combining as much clear direction with flexibility as possible,” Campbell says.
“While not an easily implementable and straightforward procedure, some initiatives can be set in place to assist in the process.
“Putting cost management to one side, whether it is large or small occupiers, a clear directive is the need to provide a high-quality fitout to attract and retain staff and ‘earn back the commute’.
“Fit-outs are now nearing cafe-level specifications in a growing number of instances with wooden panelling and detailing, tiling, acoustic sounding panels, a biophilic environment, super collaborative break-out spaces, and more. Furniture package solutions are also increasingly being offered.
“There is a cost to this. A laser-tight focus on optimal space utilisation, as well as lease term length, which are all about flexibility, helps to build a more positive cost profile while releasing the long-term burden on businesses in a changing economic and financial environment.”
When it comes to the question of where hybrid working fits in future best practice working principles, Campbell notes there is no onesize-fits-all answer, but how a business operates and what it wants to achieve likely provides some clues on how to tackle the situation.
“While financial requirements remain a fundamental aspect of any business and leasing strategy, the success of a business is often about its people and therefore behavioural characteristics should be an equally important factor for consideration in leasing strategy work.
“More than two years on from our first lockdown, an increasing body of work is being released highlighting the benefits of people working with each other and in an office environment on innovation, creativity, and productivity.
“Research bears this out, and we know it from our own experience, regularly it is the faceto-face meetings, in-person and chance encounters, serendipitous moments, socialising, and diversity in group thinking that keeps ranking highly in the benefits of working in an office.
“Without these aspects, a lot of missed opportunities emerge.”