What’s in Store for the Future of Offices?
Australia’s office market has undergone a structural shift in the wake of the digital transformation of workplaces by Covid.
Corporate employees want to retain their flexible work conditions, leading their employers to adopt hot desk arrangements for reduced floorplates. Some SMEs have chosen to stay at home, fulltime, reducing their outgoings.
Vacancy rates have risen, leaving office tenants with the upper hand in negotiations. Landlords have needed to be proactive in protecting the appeal of their assets.
“Over the last 12 months we’ve seen office landlords in the city, through to the suburbs, upgrade their buildings in order to entice tenants back to the market,” said Manoli Nicolas, Senior Sales and Leasing Manager at LJ Hooker Commercial Brisbane.
“Landlords have taken initiative by painting the exterior of their buildings, upgrading the internal fit out and ensuring furniture is in place ready for tenant commencement. End of trip (facilities) and lifts within buildings have also been added in order to make more user-friendly workspaces.”
Mr Nicolas said there had also been a movement of office tenants, who would normally seek out city floorspace, to suburban office facilities. In doing so, employers are delivering better access to parking for staff and lessening their commute times – another expectation for workers, post-Covid.
“The suburban office market is often underpinned by larger tenants and in the state of Western Australia which a strong mining focus, many miners and supporting consultants occupy space in the suburbs,” he said. “The quality buildings will always be in demand and the buildings that can provide amenity for their tenants and the staff of those tenants will also be an attraction, to not only keep the tenants happy but for companies to retain their staff.”
Workplace culture and efficiency through in-person collaboration are reasons why businesses are returning to the office. However, tenants are much more discerning in their environs.
From a landlord’s perspective, this is where the expertise and knowledge of a commercial real estate specialist is critical for design.
Mr Nicolas said: “From a raw lands component we meet with the client and discuss key design considerations to ensure that the building is suitable for existing users in the market and also future users coming through in the nest 10-20 years for the life of the asset”.
Fendi Klementou, of LJ Hooker Commercial Adelaide, said commercial real estate experts were critical members of every clients’ wider panel of trusted advisers, protecting their development projects and acquisition strategies.
“As a part of our process, from the very beginning we actively engage with the clients third parties to ensure we have the assistance of the required professionals throughout each facet of the deal,” she said. “This enables us to give the most optimum and efficient result for our client’s every time.”
Office assets are on the cusp of rejuvenation following the pandemic. While the Work from Home movement has been seized upon by a percentage of workers, there is also a generation of younger professionals who want to be amidst the in-office environment. They want to be part of the office culture and progress their careers through in-person engagement.
As an investment, well-designed and service office assets will continue to attract tenants.
“Commercial real estate should form part of any diversified investment portfolio,” said Mr Siciliano. “Of course, we advise about commercial; we feel commercial exposure - whether that we direct ownership or participation in a syndicate - is a proven way to achieve strong returns and genuine capital growth.”
The office sector is just one class that LJ Hooker Commercial specialises in.
“Our service offering at LJ Hooker Commercial is unique in the marketplace because we’re able to service our clients’ whole portfolio,” said Mr Nicolas. “Most of our competing agencies in the marketplace are only focused and specialise in one particular area of commercial property. At LJ Hooker Commercial, we’re able to service the clients’ entire portfolio., whether it be industrial, retail or office that’s included in their portfolio.”
If you’re looking to find out more about the changing office market in Australia, or would like an expert appraisal of your existing property, contact the team at LJ Hooker Commercial today.