Long live the workplace

Long live the workplace

Auckland Office Workplace – Feburary 2021

Long live the workplace

When as a nation in March 2020 we were directed by the Prime Minister to work from home, office-based employers were forced to deploy their teams and engage in a wholesale different way of working.

The doomsayers started surmising that physical offices would no longer be required, occupiers wondered if they’d need to offload some office space, the number-crunchers liked the potentially-lower cost structure and the family dog relished the multiple daily walks.

But then, reality set in. Working from a busy household wasn’t ideal when concentration and quiet was required. The millennials working from shared flats in boxer shorts while eating cereal and participating in a Zoom call, discovered that they missed the office and its opportunities for connection.

Brendan Graves

Brendan Graves
Associate Director Corporate Leasing

Brendan Graves, Bayleys’ associate director of corporate leasing, says the pandemic situation consolidated the importance of the centrally-located physical office in a business’ operational model.

“In New Zealand, we were ahead of much of the world in returning to the workplace and after some initial uncertainties, the majority of our large corporate clients realised that they do in fact require significant office space and won’t be offloading much – if any – on to the sub-leasing market.

“Those businesses that could pivot quickly and showed an aptitude for agility and fluidity are the ones doing extremely well.

“Rather than rushing to sub-lease space, they’ve worked out how to use their office floor differently, more efficiently and they’ve responded to calls from employees for more flexibility.

Graves says global research is showing that while around 70 percent of workers would like some inherent flexibility as to where they work within the wider workplace ecosystem, the office remains critically-important for learning, embedding corporate culture and for social interaction.

“The bouncing of ideas and collaboration between individuals in real time is so valuable, and studies confirm that lower levels of creativity can equate to lower overall profitability over time.

“Locking in robust digital platforms for project and workflow management for the flexible component of the reimagined workplace has also been important and gives everyone confidence that they’re moving in the same direction – even if they’re distanced for some of the time.”

Bayleys’ global partner Knight Frank says while the form and function of the office may well change thanks to health responses, reduced international corporate travel and the escalated digital world, the office will still be needed.

From a recruitment angle, being an employer of choice suggests that the physical space will take on heightened meaning and it needs to have inherent, tangible and monitorable value.

“The common theme that’s coming through in global research is centred around amenity, wellbeing and sustainability,” says Graves.

Work-life balance came under pressure during the work-from-home mass experiment during the pandemic’s height, with demotivation a common theme.

However, now that work has returned to normal in New Zealand, it is widely agreed that some things in the office sector need to change.

“The focus has shifted from survival mode to having a sense of purpose and this is not change for change’s sake – but for the greater corporate good,” explains Graves.

“The office will survive – with a higher level of amenity, a new-found appreciation for the water-cooler connections, and a realisation that so much learning and mentoring goes on in a face-to-face environment.

“Rather than working from home as the only other option, working closer to home may be the right model for some employees, so some employers are offering more dispersed options with suburban nodes.

New Zealand’s largest landlords naturally have plenty of skin in the office leasing game and could have been forgiven for being unnerved by the uptake in work from home dynamics.

NZX-listed Precinct Properties invests in high quality real estate, including premium office space, concentrated in the city centre in strategic locations.

Chief executive, Scott Pritchard says as a long term owner, Precinct’s relationship with its clients is key and this became particularly relevant as it navigated the challenges of Covid-19 with its tenants.

“We have seen low intent to sublease across the Precinct portfolio which likely reflects the higher value placed on the office by premium city centre-based occupiers, especially those with a high performance culture.”

“I think time spent working from home in 2020 highlighted the importance and value of having a workplace that fosters collaboration, creativity and culture to drive productivity.

“Businesses will continue to require a base for meetings, collaboration and value-add initiatives and the workplace has become even more important for businesses as they compete for talent and aim to attract the most highly-valuable workforce.”

While some businesses will embrace the distributed office model using the core + flex template, other major players in New Zealand’s office accommodation sector echo Pritchard’s confidence in core CBD office space.

Robert Jones Holdings (RJH) is one of New Zealand's largest private central business district office building owners, with around 700 tenancies across 18 central Wellington buildings and eight office buildings in Auckland, including the AIG Building, SAP Tower and Crombie Lockwood Tower.

Greg Loveridge, RJH managing director, says quality CBD office space will remain sought-after and viable despite changing work models and some business realignments post COVID-19.

Loveridge says more flexibility, as opposed to working-from-home proper, was increasing anyway before the pandemic forced employers’ hands.

“This is particularly important in keeping mid-career women and men at work, while allowing them time for family commitments.

Alexander Sykes, New Zealand country manager for IWG, a global coworking space provider, says the CBD office light will not be dimmed.

“Companies still need somewhere that delivers corporate identity and a place that allows people to congregate.”

Graves says the services of Bayleys’ advisory teams and those of external architectural/design firms, have been in high demand as landlords and occupiers look to optimise their relationships – and the space they are invested in.

“Bayleys’ experienced teams can reassure occupiers and landlords that they are on the right track in wishing to change up physical space and leasing structures to streamline things for 2021 and beyond.

“Planned and structured moves are being cemented and solutions are being found across all occupier models.

“The workplace’s new-found importance is exciting and it’s not over yet – there’s plenty of innovation, collaboration and imagination still to come.”

Read more market insights from Workplace

Subscribe to receive the latest commercial news and insights from Bayleys Workplace