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News release

AUSTRALIA

Workplace strategies like ABW impacting on Australia’s stock of commercial buildings

As new commercial buildings come out of the ground, the square metre ratio of space per employee continues to drop which has implications for older buildings where the ratio is higher


​ As workplace strategies have shifted from the traditional office model to Activity Based Working (ABW) , the workspace allocation per employee has dropped from approximately 25 square metres in the 1980’s to 12 square metres or less under ABW workplaces today.  Many new builds are now planning for only 8-10 square metres of office space per person.

A JLL paper, titled ‘Future proofing your asset to attract new tenants – A guide for building owners’ explores the implications of less square metre space per employee.  The paper outlines a number of implications for older buildings if occupation densities are varied and a building’s population increases, as investment may be required in the base building infrastructure and other facilities.
The shift towards occupant densities of 8-10 square metres per person will place a substantial additional load upon B and C-grade buildings which typically have been designed for ratios of 15-20 square metres per person.

With PCA figures showing that more than 60% of commercial buildings in Australia are classed as B, C & D-grade, these older buildings need to keep pace with changes in workplace strategies and building technology or risk becoming obsolete

JLL Research figures for 2016 show that 47% of commercial office stock in Sydney is over 30 years old, 40% in Melbourne, 41% In Brisbane, 41% in Perth, 46% in Adelaide and 24% in Canberra.


 
Craig Mason, JLL’s State Manager for Project & Development Services in NSW said, “New workplace models have typically only been implemented in A-grade office space.  However, strategic investment into a B or C-grade building to make it more efficient will widen the appeal of the building to a broader range of tenants and future-proof the asset as workplace and technology trends become entrenched in the market.

“Upgrades of existing buildings to suit agile working environments can be completed while the building remains occupied, with careful planning and execution.

“The internal rate of return (IRR) on investment on upgrades varies depending on circumstances of particular projects, however is typically of the order of 10-20% per annum.

“Buildings that have successfully upgraded services and activated the common areas can attract a broader tenant pool and also improve the overall rental achieved and capitalisation rate of the building, thereby providing incremental value uplift to owners.
“Upgrading B and C-grade buildings to create modern, sustainable and healthy workplace amenity by providing the services, technology and facilities that tenants are increasingly seeking can only improve investment returns for owners,” said Mr Mason.

Implications for building owners of lower occupant densities of 8-10 square metres per person:

The JLL paper outlines a number of implications for older buildings if occupation densities are varied and a building’s population increases, as investment may be required in the base building infrastructure and other facilities, including:
  • Air conditioning – increasing and varying occupation densities will generally require a substantive upgrade to the air conditioning system;
  • Lift upgrades – new workplace strategies can increase the capacity of a building resulting in longer lift waiting times;
  • Fire services – the additional people load means fire services might need to be upgraded;
  • Acoustics – with more people using an open space, acoustics need to be attending to including building fabric and services.