COVID’s silver lining drives sustainable new office culture

AUSTRALIA, 29 September 2023 – Improvements to the overall workplace experience driven by the COVID era disruption should ultimately mitigate risk and stimulate cost efficiencies across a revitalised office sector, according to JLL’s latest research.

The Tenant Perspectives: National, local and sector office market insights report found landlords were increasingly looking to improve the overall workplace experience to achieve a meaningful return to work, while the growing imperative to fulfil sustainability criteria had been a key market driver in tenants’ latest flight to quality.

JLL’s Head of Tenant Representation – Australia, Michael Greene, said the last 18 months had been “a period of unprecedented turbulence that literally shook the foundations of the modern workplace”.

“However, there is always a silver lining,” he said. “Today, a workplace is far more than just a property: it’s a living environment that allows employees and organisations to craft the best possible fusion of life and work – and that is an outstanding outcome and one which appears much more sustainable especially in terms of a greater understanding in relationships between landlords, tenants and their staff.”

The report reveals that during the 2022/2023 financial year there was a positive net office take-up of 182,000 square metres for prime office space nationally, and a pursuit of top-tier stock driven by a desire for improved human experience along with the growing imperative to fulfil sustainability criteria.

Total stock under construction nationally is currently just shy of 600,000 square metres, including 21 new projects and six new refurbishments to be completed in the current financial year.

Mr Greene said the quest to attract the best staff continued to drive innovative solutions.

“For the decade pre-COVID, a new generation of employees had been challenging the traditional workplace concept. They wanted a workplace that responded more to modern lifestyle and to issues such as climate change, and they were prepared to shop around for the best employers in that space.

“Just like the massive COVID-driven changes we have seen in transport and logistics, the office sector has responded with a much more rapid take-up of emerging trends. Landlords are now creating positive tenant experiences by providing amenities such as communal spaces, food and beverage options, as well as wellness programs. Such innovations are having a positive impact towards drawing employees back to the office.”

In one Sydney CBD office, almost 50 per cent of the NLA has been configured as work/café environments which wrap around a central staircase that connects three floors. This has resulted in an average occupancy rate of 66 per cent, well above office and utilisation trends across Australia which are currently averaging 42 per cent.

COVID’s silver lining

“This is the future for tenants,” Mr Greene noted. “It has never been more important for companies to truly understand and align their people, tech and workplace strategies to elevate their workplace experience and to achieve success in their hybrid working approach, one that attracts people back to the office.”

He said both private and public occupier clients had enquired about strategies linked to productivity and hybrid effectiveness, asking key questions around bringing workplaces back to life by developing new wellbeing initiatives and flexible ways of working in their business.

Sustainability at the forefront of leasing strategy

The report also found sustainability remained at the forefront of leasing strategy not only to make a positive environmental impact and comply with regulations, but as a means of checking costs, attracting talent and gaining a competitive edge.

Mr Greene said with stricter regulations coming into effect from July 2024, including climate-related financial disclosure, collaboration between landlords and occupiers would be imperative.

“The ACCC [Australian Competition and Consumer Commission] has announced its intention to crack down on any entities that engage in misleading or inaccurate representations of their environmental credentials,” he said.

“By proactively aligning lease strategies with Net Zero carbon commitments, occupiers can stay ahead of regulatory changes and mitigate potential financial and reputational risks.”