Recent Colliers research reports recording elevated office vacancy in the Auckland CBD and metropolitan (non-CBD) markets is a win for occupiers searching for accommodation, but stress-testing occupational strategies and decision-making processes is advised before contemplating any major office leasing decisions.
Rob Campbell, Director of Strategic Advisory for Colliers, notes it is the first time in over a decade that overall vacancy has hit these highs, and a complex set of changes and elevated levels of uncertainty are occurring that need dutiful consideration before plans are enacted.
“Office space options are comparably plentiful in some settings, but that can sometimes be a hindrance more than a help, especially given the backdrop of changing work practices and economic conditions,” Campbell says.
“The one constant is change, and currently, there is a lot of change to absorb. Increasing costs of capital, ESG (Environmental, Social, and Governance), hybrid working possibilities, office space occupation requirements, a cost-of-living-crisis, and a tight employment market are just a selection of some of the latest considerations for decision makers.
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“Given the regularity of changes occurring, decision makers need to stress-test their existing plans and processes to match the ever-evolving environment, combining as much clear direction with flexibility as possible.
“While not an easily implementable and straight forward procedure, there are some initiatives that can be set in place to assist in the process.
“Putting cost management to one side, whether it is large or small occupiers, a clear directive is the need to provide a high-quality fit-out to attract and retain staff and ‘earn back the commute’.
“Fit-outs are now nearing cafe-level specifications in a growing number of instances with wooden panelling and detailing, tiling, acoustic sounding panels, a biophilic environment, super collaborative break-out spaces, and more. Furniture package solutions are also increasingly being offered.
“There is a cost to this, of course, and a laser-tight focus on optimal space utilisation, as well as lease term length, which are all about flexibility, helps to build a more positive cost profile while releasing the long-term burden on businesses in a changing economic and financial environment.”
When it comes to the question of where hybrid working fits in future best practice working principles, Campbell notes there is no one-size-fits-all answer, but how a business operates and what it wants to achieve likely provides some clues on how to tackle the situation.
“While financial requirements remain a fundamental aspect of any business and leasing strategy, the success of a business is often about its people and therefore behavioural characteristics should be an equally important factor for consideration in leasing strategy work.
“More than two years on from our first lockdown, an increasing body of work is being released highlighting the benefits of people working with each other and in an office environment on innovation, creativity, and productivity.
“Research bears this out and we know it from our own experience, regularly, it is the face-to-face meetings, in-person and chance encounters, serendipitous moments, socialising, and diversity in
group thinking that keeps ranking highly in the benefits of working in an office. Without these aspects, a lot of missed opportunities emerge.”
A recent study in this field looked at the effect of co-location (working in the same place together, rather than remotely) on human communication networks, analysing anonymised email communication at a large American university, MIT, over an 18-month period between 2019 and 2021.
“The results of the in-depth study highlighted that as the participants became separated from each other as a result of mandated lockdowns, the reliance on established connections grew, increasing the risk of group thinking, knowledge sharing and, ultimately, innovation,” Campbell says.
“The study also found that the introduction of some co-location, similar to a hybrid working model, made some improvements on the outcomes, but not to the same level as full co-location.
“As time progresses, the release of reports like this and others will likely highlight hybrid working plays just one part of many in the office market’s future state, but physical office accommodation will endure as people and companies look to be the best and most innovative in their industry.”
- Article supplied by Colliers
