Flex space at the forefront of hybrid working models

APAC occupiers challenged by complex, inconsistent hybrid work options 

Most aiming to redesign workspaces to align with new work styles

Colliers' Global Occupier Outlook 2023 report has found APAC office occupiers are grappling with the complexities of the hybrid work model as they attempt to strike a balance between providing employees with the desired flexibility and realigning their portfolios for the next evolution of the workplace.

The new report features insights from clients, survey results, and Colliers experts zeroing in on the fundamental forces reshaping workplaces, workforces, and property portfolios. This report serves as a definitive guide for occupiers aiming to construct resilient real estate strategies for an uncertain future. It reveals that the hybrid work models present both challenges and opportunities for APAC occupiers, but policies remain inconsistent across markets and industries.

A lack of clarity and macroeconomic uncertainty are posing challenges for businesses in projecting their space requirements and, according to Colliers’ experts, many businesses are approaching their decisions on office take-up and investment more cautiously.

Colliers' Managing Director of Occupier Services, Asia, Abhishek Bajpai said, "We need to be more comfortable with uncertainty, and now we are seeing a faster pace of change. Companies would previously take a long term leases, but are now building resiliency by using non-traditional leases and incorporating more flexible space in their portfolios."

Colliers' Managing Director of Occupier Services, Asia, Abhishek Bajpai 

Flexible strategies help stabilize occupancy policies while improving the attractiveness to prospective hires. Talent is getting harder to attract and employees are placing more emphasis on flexibility. Colliers' data shows most occupiers are pursuing a hybrid working model but there is significant variation on the specifics. In APAC, 12% of respondents said they see no disadvantages to hybrid working, but there is still a need to support the corporate culture throughout this transition.

"China's cities are at the beginning of a two-to-three-year supply wave. Companies should use this time to reassess their real estate footprint and reimagine the purpose of their offices," Mr. Bajpai said. The high-quality new supply coming online in China gives occupiers a chance to future-proof their occupancy decisions. Continuing, he said, "We pivoted to providing direct support to our clients in this transition, rolling out specific teams to assist with flexible workspaces and future workplace planning, ensuring occupiers have an experienced partner at their side."

"While challenges persist, this period of change presents unprecedented opportunities for office occupiers to reimagine the role of space and explore new approaches that cater to evolving employee needs. Across the APAC region, occupiers are realigning their office portfolios to meet business needs while providing the flexibility employees desire," said Mr. Bajpai. "The right real estate strategy with an optimised portfolio is key to keeping the culture intact, while also attracting and retaining the best talent, and controlling operational costs."

In Beijing landlords are increasing rent-free periods and this, coupled with submarket-specific industrial support policies, creates great opportunities for tenants. In Shanghai, landlords are increasingly offering co-working products, which combined with the coming supply wave, allows tenants to build in flexibility to support their operations through their next lease term.

Additional report findings include:

Employees want the best of both worlds. While more than 65% of workers are seeking more in-person time with their teams, 70% of workers want flexible work options to continue.

66% of decision-makers are considering redesigning physical spaces to better accommodate hybrid work environments.

The growing urgency to attract and retain talent is prompting companies to consider alternative workplace solutions and new locations.

Flex space has been brought to the forefront by the hybrid working model and has helped occupiers optimize costs and ensure employee flexibility.

Companies across the globe are investing in ESG and DEI initiatives, including green designs, tech-enabled features that promote higher health & safety, wellbeing amenities, and inclusive workplace environments.

Demand for green-certified buildings will continue to rise as overseas headquarters mandate occupancy policies requiring eco-friendly buildings that meet environmental, energy, and health standards in their design, construction, and performance. 

The Global Occupier Outlook 2023 report features insights from, and resilient strategies being adopted by, real estate decision-makers to prepare for an uncertain future, adapt to emerging market trends, and overcome unprecedented challenges. It highlights efforts being made by leading global companies to strengthen their processes, build resilience, and meet complex needs, with the aim to enrich the workplace experience. 

The report has a special focus on ESG frameworks and the adoption of pioneering technology. Since more than 65% of workers are seeking more in-person time with their teams, companies are investing in green design, tech-enabled features that promote increased health & safety, and amenities supporting well-being. Other factors occupiers are focused on include DEI initiatives and having the precise mix of digital tools to support hybrid working. 

Mr. Bajpai highlighted that everyone can see some advantages to a hybrid workstyle. In our survey, less than 1% of APAC respondents saw no advantages to hybrid working. Moreover, "the links between ESG, wellness, and organizational performance are clear. Companies can no longer occupy or allocate space based solely on cost factors without engagement and productivity suffering. ESG should be built into portfolio decisions from the beginning, including the views of the workforce, as without this input, decisions are unlikely to prove effective." 

Touching on the view of the workforce, Mr. Bajpai highlighted communication as a key tool for success. "You must communicate with your downstream employees and truly listen when employees are communicating upstream with management," he said. "We recommend enticing people to the office. Companies need to create environments where people want to be because they offer a strong platform for collaboration, learning, and human interaction. There is a social aspect to being part of a company with shared goals and responsibilities, so occupiers need to create a space their employees want to work in."

Mr. Abhishek Bajpai also mentioned, "Technology plays a vital role in the future. It is important to ensure that technology provides data that is useful for analysis and decision-making. We need to make sure tech investments are fit for purpose from a real estate perspective. Innovations that are not easily adopted or are rejected by employees drain productivity."

Across the APAC region, occupiers are keen on realigning their office portfolios to meet business needs while providing the flexibility that employees desire. 

In Colliers' survey, done in partnership with CoreNet Global at its 2023 APAC Summit, 66.6% of the 206 real estate industry leaders polled said that over the next five years up to 20% of their portfolios will convert from traditional to flex leases. Some 30% of the APAC occupiers in the survey expected a 20-30% reduction in the space required for their businesses.

To download the full report please click here: GlobalOccupierOutlook_2023.pdf