Staying power: The physical office is here to stay, amid prevalence of hybrid working models

Wednesday 11 May 2022

While the demand for flexible working remains pertinent in the post-COVID environment, the need for corporations to have a physical, central office that allows for collaboration and productivity is as important as ever.

That’s according to CI Australia, following a report from co-working operator Hub Australia and online knowledge platform Worktech Academy exploring the future of work. The self-titled report explores the concept of ‘Liberated Work’, which affords "the freedom to make an empowered choice with where, when, and how you work. [...] It means employers investing in HR resources, technology and real estate so they can recognise and actively respond to the individual requirements and circumstances of all employees." This includes the requirement for a physical real estate presence for the foreseeable future.

Key findings of the report, which draws on interviews with global workplace experts and a survey of 500 corporate employees, includes 55% of workers saying hybrid work has benefited their work/life balance, while 38% saying they were more productive.

However, there are noted drawbacks identified in the report, including 23% of employees ‘never’ feeling connected to the workplace when they work virtually, and that switching between either ‘working at home’ or ‘working in the office’ risks creating a 'two size fits all' approach. The report states that “A consistent and physical anchor point will still be required in some form, so employees have a space to meet, bond, collaborate, professionally develop and foster company culture. But how such spaces look, feel and are offered by organisations is rapidly evolving.”

Ben Kardachi, Director of Commercial Leasing – CBD at CI Australia said that while office landlords had long provided compelling real estate propositions for tenants given the ongoing relevance of the central office, the post-COVID environment was driving higher levels of strategic investment to compete and stay ahead of the evolving market.

“The conversation landlords are having with tenants in many respects is not the same as it was pre-pandemic. The evolution of building design is in part being driven by landlords’ efforts to provide a tenant experience that reflects the best of working in an office and the feel of working flexibly.

“While tenants are continuing to personalise their leased floors to reflect the needs and wants of their employees, landlords are helping to knit this together to create a cohesive ‘whole-of-building’ experience. A key example is the move towards a lobby that blends hospitality amenities, quiet and collaboration zones, wellness features and in general, a sense of place that celebrates the community and the balance between work and life.”

Mr Kardachi said high-quality speculative fit-outs were another key theme in the current market and a way landlords were achieving success. This follows the placement of sub-leasing and hand back space under lease rights onto the market during the pandemic.

“As businesses continue to evaluate their current and future office requirements, a ‘plug and play’ solution that allows for a seamless relocation is an important starting point. This is what speculative fit-outs that are provided as part of the leasing incentive offer - workspaces that are as functional as they are flexible, to allow for tenants’ personalities to be championed in design and layout edits. These benefits are in addition to reducing significant upfront costs for prospective tenants, and giving landlords another avenue in which to create competitive offerings in the changed market.

“Overall, these factors work in harmony to provide incentives for businesses considering relocating to do so, and to provide the best possible experience for their employees when in the office,” he said.

Mr Kardachi is currently working with leading investment manager and long-term client Challenger on the leasing of speculative fitted-out offices within 35 Clarence Street, Sydney. Challenger has recently completed a high-quality speculative fit-out of 930 square metres on the whole of Level 9 within the building, and a suite on Level 12 of 384 square metres.

An accessible presence in a key CBD is another factor for both landlords and tenants embracing the future of work, according to fellow Director of Commercial Leasing at CI Australia, James Michail. “While flexible and co-working spaces and the ‘hub and spoke’ office model certainly have a place in the short and long-term, many occupiers retain the need and want for at least one main commercial real estate commitment, for reasons including corporate presence and relevance, collaboration and centralisation. It’s in these instances that having a corporate ‘home’ in a key city CBD – whether that’s in the City or in Western Sydney - is so important,” he said.

“The Greater Cities Commission’s ‘Metropolis of Three Cities’ plan reflects the growing relevance and evolution of Western Sydney across Parramatta, Badgerys Creek, Campbelltown-Macarthur and to Penrith. This vision and the associated investment and development across Greater Sydney will allow landlords and occupiers in future a far more geographically diverse pool in which to build an accessible, attractive and highly visible presence in one of the city’s CBDs.”

Mr Michail is currently appointed to the leasing of 150 George Street Parramatta, on behalf of Mintus in conjunction with Cushman and Wakefield. 150 George Street is an A-Grade 22,000sqm 21-storey office tower that has recently undergone a major designer refurbishment.

Mr Michail said, “Mintus’ investment into 150 George Street is an example of landlords adapting to, and anticipating for spaces that provide the best possible pre and post-pandemic office experience – one which blends the collaboration and connectivity of working in an office with the more comfortable, and flexible style of working that your favourite café or hotel might provide.

“The evolution of Western Sydney and in particular Parramatta has seen it grow into a more desired hub than in years gone by, and this is set to increase as the Greater Cities Commission’s Plan comes alive. Parramatta’s blend of unique food and beverage offerings, retail, transport and general connectivity to and from the city’s other key hubs are helping to cement it as an attractive and diversified home for occupiers now and in future. Therefore, we expect many occupier types to see the strong value proposition of 150 George Street.”

For further information on CI’s current office leasing opportunities, or an update on the market, contact our experts below:

James Michail
+61 413 351 179
jmichail@ciaustralia.com.au

Ben Kardachi
+61 419 230 278
bkardachi@ciaustralia.com.au

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