_The demand for space focused on service, experience and amenity
We haven’t really seen wholescale downsizing of office space across most markets as once predicted, but the way tenants choose space going forward is expected to change. What are they looking for now?
Tenants are looking for hotel-level service, customer experience and amenity in workplaces as they make – in many cases, overdue - decisions on their space post the pandemic. There is a flight to quality, but it is quality of the whole workplace experience, not just up the PCA quality curve due to the financial opportunities.
We are yet to see a downsizing trend following COVID. If anything, large tenants are dealing with downsizing via subleasing at the moment.
Why are we seeing this trend towards service, experience and amenity? Is it all about keeping staff happy, and attracting and energising employees?
Yes, the war for talent is real. A focus on service, experience and amenity leads to talent attraction and retention.
In addition, if you want your organisation to thrive and grow its difficult to do in a dispersed environment, with people working from different locations. Making it an attractive place to be will bring employees back to the office.
What particular design features are you seeing that tenants want in their space moving forward?
It’s a continuation of where best-in-class was pre-COVID. We are seeing demand for hotel quality end-of-trip facilities, attractive building lobbies providing third spaces, facilities for quiet working or meeting spaces outside the core tenancies.
Tenants and employees want fewer desks and more communal working space with collaborative, residential-style furniture for meetings. They also want more green space and the ability to work outdoors on terraces, with WiFi and technology, in a comfortable weather-protected environment.
We are also seeing a push for access to building performance information from tenants. The next big focus is carbon neutrality.
How are landlords responding to the growing demand for service, experience and amenity?
At an institutional level, landlords have been listening and responding to these requirements of tenants for some time, and we see this in the quality of recently delivered buildings in Sydney and Melbourne. Great examples are Quay Quarter Tower in Sydney and 477 Collins Street in Melbourne.
Will the demand for space that provides customer experience, hotel-level service and amenity by tenants also come through building refurbishments, as opposed to just new projects?
Yes, buildings can be refurbished to a high-quality level to provide the most up-to-date best in class amenities.
Examples include Chifley Tower, Angel Place and 2 Market Street in Sydney, as well Queens, Collins and Bourke Place in Melbourne.
Will this demand for SEA space lead to a surge in supply in the CBD to provide new stock?
There has been a surge in demand for stock of this quality, but the planning process doesn’t move that fast.
Buildings that need to up the ante in services and amenity will do refurbishments or become redundant, or a price taker in the real estate market.