3 in 10 APAC firms to increase office space in the next 3 years
51% also expect to move headquarters in the same time frame.
Businesses headquartered in Asia-Pacific are less likely to feel the long-term impacts of COVID-19 on their real estate portfolios, with only 14% expecting the pandemic to permanently alter their real estate strategies. This is according to Knight Frank’s global (Y)OUR SPACE publication, which features survey findings of almost 400 international businesses with a combined headcount of over 10 million, providing a unique insight into the workplace strategies and real estate needs of global companies.
The survey results show a contrast between APAC and overall global corporate real estate attitudes, with 17% more APAC businesses likely to increase real estate portfolios and 18% fewer APAC businesses likely to decrease their global portfolios compared to their global counterparts. However, for those expecting to increase or decrease their portfolios, the proportion of those seeking to make substantial changes of more than 20% is greater than that of global levels.
Figure 1: Is the total amount of space in your global portfolio likely to increase, decrease, or stay the same over the next 3 years?
Teh Young Khean, Executive Director of Corporate Services, Knight Frank Malaysia said: “The overall activity for new take-up in Malaysia’s office market will generally be slower in the next three years as companies are readjusting their plans for the short-term.
However, this varies depending on industries. Businesses related to e-commerce, hygiene and healthcare, technology and business process outsourcing are active and we foresee more take up will be coming from these sectors. Despite the current market condition in Malaysia, we have also seen an increase in enquiries on workplace consultancy from organizations to assist in developing strategies on future workplace arrangements.
The other area where APAC responses diverged from the global average is the likelihood of shifting headquarters. In the (Y)OUR SPACE 2021 survey, 51% of APAC respondents said that a move is likely to happen in the next three years, which is 13% higher than the proportion of global respondents who answered similarly. “With the double whammy effects resulting from the current oversupply and weak market sentiment in Malaysia, certain occupiers may take this opportunity to relocate their office spaces for a building that offer better value propositions especially for an option that could provide better savings opportunity” shared Young Khean.
While cost savings is the main driver globally for influencing this decision, the second key driver for relocation for Asia-Pacific headquarters is the ability to access different talent pools. a significant portion of APAC corporates are looking to move HQ facilities and are doing so to achieve their goals of talent attraction and access to different talent pools. However, the question remains – where exactly they are going and how does this affect existing real estate strategies. For that, we look beyond the (Y)OUR SPACE 2021 survey for further insights into this particular trend.
Some APAC cities are facing a new type of problem – long commute times. Particularly, in some developing and emerging countries, traffic congestion and a lack of parking space run rampant. According to a study conducted by Boston Consulting Group (BCG), three developing markets see average commuters spend more than an hour in traffic congestion or in search for parking lots per day, with Kuala Lumpur coming up in the sixth placement in terms of congestions, especially during the peak hours.
In contrast, only 22% of global respondents found this important, giving priority to a change of work styles, business restructuring, and business transformation before considering this factor.
According to Knight Frank’s (Y)OUR SPACE survey, the top three types of amenities that will be demanded by employees in Asia-Pacific include food & beverage offerings, healthcare facilities and gym facilities. Hence, we are witnessing the shift towards mixed-use development that boasts a diverse mix of residential, commercial and recreation spaces all in one area. Occupiers are likely to gravitate towards spaces that provide more amenity options, and landlords could consider implementing a long-term mixed-use strategy across their real estate portfolios.
Whereas the most sought-after amenities for Malaysian workers to make a better workplace environment will be
- Building’s safety and security features
- Facilities and amenities within the development
- Amenity-rich office
- Wellness Programs and Staff wellbeing
Though some people find it more productive to work from home or outside the office, human touch and collaboration are still needed especially in workplaces where teamwork and cooperation are essential.
“As office space requirements from occupiers continue to evolve, more landlords are incorporating flexible solutions or coworking space into their buildings. This is accomplished either by operating it in-house or by partnering with established coworking operators, said Young Khean“
Young Khean added, “co-working complements conventional office space as the facilities and amenities provided by co-working centre will further add to the building’s unique features for the benefits of all tenants in the building. These coworking spaces can be a strategic option for occupiers as they tick their checklist of having:
- Agility & flexibility
- Ability to access anywhere
- Facilities & amenities provided
- Ready-to-move-in office
- Cost friendly
- Bespoke product offering
While these trends present challenges to the status quo, opportunities also arise as a result. In this case, new geographies will become key areas of economic development in the next decade. Businesses must begin curating a better workplace experience through better and more amenities that seek to take care of employees’ wellness and health.