Ravi Chandran
New office demand will require companies to focus on design and decentralisation as they prepare for re-entry
As organisations prepare to return to the office amid an easing of lockdown restrictions across Asia Pacific, many are considering how their corporate real estate portfolios should look in the ‘next normal’. According to a survey by JLL, more than 80% of its clients have started to explore alternatives to keep their business operational or carry out certain modifications to their offices.
Office demands know-hows in complex re-entry journeys
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The real estate firm’s latest ‘Guide for Workplace Design Considerations’ outlines some short- to long-term priorities, including space planning solutions, tech-enabled experiences and operational functions that help corporates navigate the complex re-entry journey. The guide also highlights how companies can re-assess their office footprint with decentralization scenarios or re-designs that can protect their businesses and people in the long run.
“Office re-entry will be a gradual and multi-phased journey that is likely to evolve as economies open up again,” says Martin Hinge, Executive Managing Director, Project & Development Services, JLL Asia Pacific. “As people head back to the office, our clients’ number one priority is to ensure that they’re welcoming people back to a safe and healthy environment.”
This office demand includes setting up private, enclosed workstations, fitting social and break-out spaces with labels or physical dividers, or even installing thermal imaging technology in the building lobby and reception areas.
Darren Wee, Executive Director, Head of Projects & Development Services, JLL Singapore says, “In Singapore, we are starting to see more demand for office redesign in an agile yet safe manner, to achieve a balance between space optimization and occupant wellbeing at a manageable cost, as companies prepare for re-entry following the gradual easing of circuit breaker restrictions.”
“In the short-term, organisations will need to find ways to deliver quick adaptations to the workplace, ensuring safety and comfort for employees. However, in the long term, business leaders will face decisions about their workspace usage against a backdrop where social distancing may be required for a protracted period,” says Gonzalo Portellano, Head of Portfolio Design, JLL Asia Pacific.
Over the long term, organisations with office demand may have to decide how to plan and optimise their office footprint in a cost-effective manner, according to the guide. It points out that decentralized working hubs may soon be on rise, as these enable remote working from different locations, reducing commute times and increasing convenience for employees.
Portellano adds: “Companies may start shifting their offices from prime locations into smaller, more versatile hubs distributed across the city. These tech-enabled hubs can be located in areas supported by good infrastructure, public transport connectivity and that offer lower rents.”
“Looking ahead, we anticipate that organisations will take a bold step in office transformation, be it with decentralization or spacing designs. The evolution of the office will no longer be about how people occupy spaces but how people use and interact with spaces.”
“We foresee higher adoption of proptech solutions in Singapore’s workplaces to provide data and analytical insights on how employees are interacting with the office environment to better support their workspace planning and employee engagement strategies,” adds Wee.
Another recent JLL Research says office demand and usage will evolve according to corporates’ changing needs in the COVID-19 world.
According to JLL’s data, leasing activity softened with global volumes 22% lower than in Q1 2019 as deals were cancelled or delayed. Asia Pacific leasing activity, however, was down only 9% quarter-on-quarter in Q1 2020 and up 14% year-on-year. This has yet to filter through to vacancy rates in Asia Pacific, which were flat compared to a quarter earlier at 10.9%.
“For Singapore, the vacancy rate of Grade A office space in the central business district crept up marginally to 5.0% in 1Q20, from 4.1% in 4Q19 while the average monthly gross effective rents contracted 0.1% quarter-on-quarter to SGD 10.80 per sq ft, from $10.81 per sq/mth in 4Q19,” says Tay Huey Ying, Head of Research & Consultancy, JLL Singapore.
“The current situation poses disruption and challenges for the office sector. The way people view and use corporate real estate will change. However, we can expect the office to remain at the heart of employers’ occupational strategies in Asia Pacific over the medium-to-long-term,” says Anthony Couse, CEO, JLL Asia Pacific.
As companies prioritise the health and safety of their employees and implement social distancing to re-enter workplaces, changes to office demand and usage will be inevitable, according to the report published by JLL. CEOs are re-examining strategies and may consider recalibrating the amount of space dedicated to traditional office space upon lease expiry, or even before.
However, despite current headwinds, the global real estate consultant believes the office is here to stay. In fact, in some cases the pandemic may lead to an expansion of office space, as companies try to increase physical distancing among their employees. Current office configurations may be modified, increasing the need for additional space. In doing so, occupiers may consider tapping into flexible space from third-party operators, alongside continued remote working for some employees.
Not all remote working is created equal
Despite a seemingly successful work-from-home experiment globally, offices will continue to be sought after in this region. Although the pandemic has shifted perceptions around the effectiveness of remote working, it has not presented a sustainable or optimal long-term solution for all corporates.
Huey Ying shared, “In Singapore, while work from home has been feasible for many during the circuit breaker period, it is telling that more than a third of the close to 200 respondents in a recent survey we conducted with Singapore-based corporate clients indicated their preference to work from the office post-COVID19. The lack of a conducive work-from-home environment could be a key contributory factor. Shared homes, which is prevalent in Singapore, makes it difficult for many to have dedicated and conducive home workplaces. According to the Department of Statistic Singapore, the average resident household size stood at 3.16 persons and we estimate that more than 80% of Singapore resident households are living in homes with three or fewer bedrooms in 2019.”
While remote working has been credited with providing employees with more flexibility and work-life balance, offices still play a central role in creating a space for employees to collaborate, interact and unite around shared values, boost staff morale and enhance productivity.
Mr Couse adds: “Today’s corporates operate in an increasingly fast-moving environment where innovation is key to retaining a competitive edge and sustaining company performance. Successful companies pride themselves on having collaborative spaces that drive excellence and innovation.”
