Tenants demands have changed, and landlords are listening
Scales still tipped in favour of tenants - Perth’s office vacancy remains at over 19%, despite a strong WA economy and an uptick in leasing activity
PERTH, 14 September 2021 – WA businesses are adapting to employee’s appetite for greater flexibility and new hybrid ways of working. We are seeing a recalibration of office space use, translating to a decrease in core space required and an increase in flex space.
Tenants are taking advantage of the favourable market conditions and generous financial incentives on offer, to reinvest and create an outstanding and engaging workplace to attract employees and/or upgrade to better quality buildings…. a ‘flight to quality’.
As a result, we are seeing an amplified demand from tenants for building owners to provide (in building) flex space, excellent amenities and areas with curated activities ranging from fitness classes to wellness programs and social events.
Landlords are increasingly partnering with tenants to recreate these spaces within their buildings to accommodate the new hybrid working patterns.
They are motivated to undertake a ‘building refresh’, to capture this renewed demand and/or uptick in leasing activity driven by strong economic activity.
We are also seeing the structure of lease deals change, with more flexible lease terms being negotiated. The gap between incentives offered to renewing tenants and relocating tenants has narrowed significantly.
In a survey conducted by JLL in 2Q21, on how office workers feel about working from home, most notable responses confirm key feedback from tenants we are seeing in WA including:
- Productivity at home is declining, raising employees renewed expectations for the office’
- An outstanding office is the best way to engage your employees’
- Flexibility in working patterns have become a must have in the employee package’
Andrew Campbell, Head of Tenant Representation (WA) said “The survey results and feedback from our clients suggest, that offices are more important now than ever before as the centre of the work ecosystem and that outstanding office environments will remain a critical way to engage employees”.