Australian corporates not looking at major rationalisation of workplaces
JLL Survey finds majority of occupiers plan to keep their property portfolios intact in response to COVID-19.
AUSTRALIA, 11 September 2020 – A JLL survey of Corporate real estate (CRE) leaders in Asia Pacific has revealed Australian respondents are more focused on steady rationalisation of their workplace footprint in response to changes arising from COVID-19, rather than greater rationalisation recorded by some of their Asia Pacific counterparts.
In the report titled titled “Optimism in the Face of Crisis”, a majority of CRE leaders intend to maintain their real estate portfolios and keep the same number of locations/sites.
The majority (76%) of survey respondents across the region expect only moderate impact or steady rationalisation (i.e. expansion or contraction) of their real estate portfolios. Those in Australia and Hong Kong are more focused on steady rationalisation whereas leaders in India anticipate massive and accelerated rationalisation. Despite the differences, half of all CRE leaders expect their total portfolio to stay the same in the medium to long term. Two thirds of CRE leaders (63%) also expect their total number of locations or sites to stay the same.
CEO of JLL Australia, Stephen Conry said, “A higher number of Australian respondents to the JLL survey said they expected a steady rationalisation of their property portfolio in response to COVID-19 – at 60% of respondents compared to the Asia Pacific average of 46%.
“The mass work from home experiment in Australia was better than expected because there was no other choice, but it should not be interpreted as the next normal. Working remotely for some people will continue to be part of staffing flexibility policies for many organisations but a number of studies show the physical workplace and what it represents as a company hub is still a powerful reason why people want to get back to the workplace.
“Corporate office tenancies continue to have an important purpose for shaping culture, providing an environment for collaboration and developing professional relationships between employees.
“The future of work might become a hybrid model of office space and locations - the hub and spoke model. While this might be an option considered by some, it is too early to jump to conclusions based solely on the extraordinary times we have been experiencing.
“Organisations will also consider more flexible space as part of the future workplace strategy, some due to growth to make more space for health and wellbeing reasons. The choice of location(s) will be highly dependent on the workforce catchment of a particular organisation and large CBD tenancies and working together will continue for most tenants as our cities regain more normality,” said Mr Conry.
According to JLL (NYSE: JLL), CRE leaders are now moving forward confidently in reimagining the new modern office, with a huge focus placed on prioritizing the health and wellness of employees, as well as leveraging technology in their investments plans.
Moving into the post-pandemic era, JLL expects four implications for commercial real estate as CRE leaders look towards enabling success in this era of evolving change:
- Priorities for health and wellness will transform real estate portfolio mix to accommodate a more distributed and liquid workforce. Close to two thirds (58%) of CRE leaders highlight the health and wellness of employees as a top investment priority. To support safe-distancing goals in the office and provide flexible support for remote working teams, demand for higher quality spaces or assets may increase, and portfolio mix may see the addition of medium/ smaller offices or flex/ co-working spaces.
- A mix of CRE strategies will be needed to achieve the de-densification of office space. To fulfil demands for added health and wellness requirements, the new office will see a moderately reduced average number of seats per 100 staff, a redesign and reconfiguration of space to accommodate physical distancing, split team and multiple shift arrangements, and expansion of remote working policy.
- Technology will be critical in enabling the success of new working models. Employees feel more productive when they are tech-ready. Those who are equipped with sophisticated tech tools also felt more productive. Ways to enable remote working and collaboration in the office were flagged by CRE leaders as key investments more than twice as much as any other technologies. Investments in technologies must continue to be taken seriously by CRE leaders in the future office.
- Higher acceptance of remote working will impact future CRE investment. Employees enjoy the flexibility and control that remote working has provided in their personal and professional lives. Employers have realized that many roles can be done remotely. CRE leaders will need to consider active investment in technologies that optimizes productivity and collaboration among onsite and remote workforces.
JLL Head of Research – Andrew Ballantyne said, “The importance of health and wellness was a strong finding of the survey and an area where CRE professionals have identified as a top investment priority. The eight dimensions of wellness model has never been more important with organisations understanding that COVID-19 has had a deep psychological impact on some people.
“There is a strong relationship between mental well-being and productivity. As more people go back to the office, building owners and organisations have partnered to implement a number of health related initiatives to provide a safe working environment,” concluded Mr Ballantyne.
JLL surveyed 200 corporate real estate leaders from the Asia Pacific, including Australia, China, Hong Kong, India, Japan, Korea, Malaysia, Taiwan, Thailand, Singapore and New Zealand. Respondents were interviewed by JLL in June 2020. CRE leaders are defined as executives with strategic oversight and responsibility for their respective corporation’s real estate footprint and management.
Read more: “Optimism in the Face of Crisis”
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion in 2019, operations in over 80 countries and a global workforce of nearly 93,000 as of June 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.