The changing face of offices
Automation of jobs and offshore workforces have been widespread upshots of the digital age. It’s provided pause for thought in boardrooms and c-suites poring over budget line items. It’s also encouraged office landlords – big and small – to think about how to future-proof their investments.
Offshore manufacturing has created fiscal efficiencies for Australian businesses. It’s also forced industrial landlords to repurpose their former factories for warehousing, creative spaces and lifestyle uses such gymnasiums.
Retail landlords also tread in shifting sands as shoppers go online. Australian Bureau of Statistics figures estimated online sales reached $1.3 billion in April, more than doubling the $510 million recorded at the same time last year. While ABS estimates showed online spending accounted for only 5.4 per cent of all retail transactions in April, it was up from 3.4 per cent for the same period in 2017 – an annual market share increase of 59 percent.
Whilst the impact on the office sector hasn’t been immediate, the landscape is by no means immune. Even desk jobs requiring critical thinking are under threat in the digital age as algorithms and AI become more sophisticated.
And while digital advancements are reducing headcounts on the office floor, cloud-based CRMs, apps and other online touchpoints have made remote working more common. In somewhere like Sydney, where workers spend an average of 71 minutes commuting each day*, working from home is a popular clause in many employee contracts.
According to the 2016 ABS, 4.7 per cent of Australians work from home. That figure is likely to be much higher when taking into account the number of people with flexible work arrangements.
We’re an ageing population, as well. It’s probable that less people will be wishing to spend five days a week commuting to their company HQ in the future.
If there’s less workers, and less demand for square metres, how should landlords make their assets work best for them?
Will we see a ‘core and hub’ approach to professional employment in the future, with more employees working from home? Could the automation of office jobs facilitate a higher concentration of ‘critical thinking’ professionals in CBD precincts, with automated functionality (robots) pushed out to cheaper areas – potentially, non-office space?
Will landlords - especially those in the city fringe - need to show greater flexibility in floor plates? Will levels for hot-desking – a-la the popular formats of WeWork and Fishburners – increasingly be incorporated into leasing strategies to monetise surplus floor space? As automation and digitisation reduces workforces, more smaller professional businesses are likely to contract in niche specialisations, requiring smaller floor plates.
History has shown us that workplace change has never been a fast-moving beast. But with the speed of the digital age, a tenant’s workplace requirements could be dramatically different between the signing of its current lease and its forthcoming renewal.
LJ Hooker Commercial’s agents on the ground are best placed to advise you on the transformation of office assets in your marketplace. Visit ljhcommercial.com.au for more information.
*2016 study by the Bureau of Infrastructure, Transport and Regional Economics