Occupiers embracing changes in Asia Pacific office market

Corporate real estate is entering unchartered territory in Asia Pacific with occupiers increasingly signaling their intent to embrace change in the market. According to occupier respondents in the CBRE Asia Pacific Occupier Survey 2018, rapid technological innovation, evolving workplace concepts, and shifting employee expectations are becoming the new normal, with these trends likely to spur ongoing office market growth for the next 24 months.

Companies generally hold a positive view towards expanding their Asia Pacific office portfolios over the next two years. According to the survey results, 45% of respondents plan to expand, while 28% anticipate a reduction, although a large portion of the latter figure likely includes companies planning to grow by improving space utilisation. 

‘We observed a large proportion of occupiers wanting to utilise space more efficiently, and a corresponding number intending to invest in technologies such as sensors that monitor workplace efficiency.  The rollout of the 5G network over the next few years, and its capacity to propel the Internet of Things, will mark a further step in the evolution of smart, efficient buildings,” says CBRE’s Head of Research, Australia, Bradley Speers.

Occupiers are also taking greater advantage of wider workplace options to drive business performance and attract talent but will continue to rely on landlord partnerships. Irrespective of whether occupiers are increasing or reducing space requirements, across Asia Pacific they are poised to commit more flexible corporate real estate solutions to align with company goals, according to respondents. As a result, landlords will increasingly serve as enablers of change and adapt to new demands in greater numbers.

“Landlords are becoming more invested in the new office market paradigm across Asia Pacific. They are structuring flexible lease terms to include flexible space providers as tenants, and further considering the specific needs and potential users of space at the project planning stage,” says Manish Kashyap, Managing Director, Head of Advisory & Transaction Services, CBRE Asia Pacific. 

According to occupiers, three major trends will drive decision-making across Asia Pacific over the coming 24 months. 

1) Solid Portfolio Expansion
– 45% of respondents plan to increase their corporate real estate portfolios in Asia Pacific in the next two years.
– Leasing space in existing buildings is the preferred means for companies to increase their footprint. Firms are also pursing built-to-suit opportunities and pre-committing to new buildings. 
– Flexible office solutions are increasingly popular, with 33% of occupiers planning to increase their use of co-working space.

2) Acceleration of Workplace Evolution:
– The adoption of Activity-based Working (ABW) will increase to 78% over the next two years. Workplace settings and policies will see greater refinement.
– Collaboration remains the key driver of workplace strategy but an increasing number of companies are placing a stronger focus on achieving the by-products of collaboration, such as innovation and creativity.
– Companies are implementing space utilisation analytics for more refined space planning.
– Increased focus on “Me” space for individual tasks to balance out collaboration spaces.

3) New Era of Technology
– 78% of respondents plan to increase their investment in workplace technology to enhance end-user experience.
– Priorities for investment include apps for meeting rooms and desk booking; connected sensors; and predictive analysis.
– Biometric authentication and air purification technology are the key features occupiers expect landlords to provide.
– The use of predictive analytics to provide a mechanism enabling occupiers to identify critical workplace needs and drive effective decisions is set to become more prominent.

The third annual CBRE Asia Pacific Occupier Survey polled 50 corporate real estate executives from multinationals and large Asian corporates from October to December 2017. All respondents oversee their respective organization’s regional and/or global real estate portfolio. Most respondents held positions with companies headquartered in North America (36%), with the remainder evenly split between Europe (32%) and Asia Pacific (32%). Major sectors included technology, media and telecommunications (30%), banking and finance (22%) and petroleum, oil and gas (10%). Flexible space providers were also included for the first time.