The future looks flexible for Asia Pacific’s office sector, with landlords and developers stretching their workspaces to provide hospitality-level services and occupiers seeking to strike a balance with employees who have settled into remote work during the prolonged pandemic.
Those were just a few of the takeaways from the latest instalment of Mingtiandi’s Office Strategies Forum on MTD TV. For Tuesday’s one-hour chat, sponsored by Yardi, Mingtiandi founder Michael Cole welcomed experts from developer Hines, law firm Baker McKenzie, investment management firm Tosei Asset Advisors and office technology provider Essensys to share their views on the Future of the Office.
David Warneford, who leads day-to-day operations in Australia for US-based Hines, delivered his remarks from Sydney, a city that only recently emerged from nearly four months of COVID-19 lockdown.
“I do believe that what has changed over the last 12 months, certainly this year in Sydney, and to a lesser extent Melbourne, is a realisation that, yes, we will continue to use offices and occupy offices, but also a broad acknowledgement that that’s going to be different to how we did it previously,” Warneford said. “From our own business’s perspective, we’re relatively small in Australia, so we can probably have some more flexibility that some of the big corporates don’t have, so we are back in the office.”
Weighing Health Risk
At Hines, which manages $83.6 billion worth of assets worldwide, management has adopted a “cautious approach” in welcoming workers back to the office in Sydney and Melbourne, mindful of the ongoing risk posed by COVID, Warneford said. Even so, the country head favours the shared-office model for offering the sort of hand-in-hand environment that remote work can’t duplicate.
“I think we are certainly a more effective business when we’re in the office, and I’ve certainly encouraged our staff to come back,” he said. “Much of what we do is based on collaboration and trading ideas and information, and part of that competitive advantage lies in the snippets of information that we pick up through our networks, and it’s just an inefficiency of working from home, what really became apparent to us, as it just doesn’t facilitate that sort of connectivity and collaboration.”
As APAC CEO at Essensys, Eric Schaffer helps provide software and digital infrastructure for flexible office platforms like Hines’ The Square. From his point of view, flexibility isn’t just the future — it’s the present.
“It’s not if or when you’re delivering flexible service-focused office propositions, it’s how and how fast,” the Hong Kong-based exec said. “The research backs this up: recent CBRE research showed that around 35 percent of companies in APAC are planning to increase their use of flexible space. Our global research shows that figure to be even higher in the next three years.”
The future of the office is as a platform, not just a single space or a single building, and flexible space and hospitality-infused services are poised to set the standard, Schaffer said.
“I think flexibility is now the rule, not the exception,” he concluded.
Beyond Central Districts
Rico Chan, head of China and co-head of the Asia real estate group at Baker McKenzie, knows firsthand how flex-focused operators are showing the way forward in office strategies. His firm advised flexible office provider IWG and Hong Kong developer Hysan on their new joint venture, which will have the exclusive right to operate all IWG brands in Hong Kong, Macau and throughout the Greater Bay Area.
For its part, Baker McKenzie added amenities such as shared “hub spaces” and other features when the firm relocated from CK Asset’s Hutchison House in bustling Central to Swire’s One Taikoo Place in laid-back Quarry Bay a few years ago. Chan expects workers to flock back to offices like his that can provide an inviting, collegial atmosphere once the COVID crisis subsides.
“My feeling is that people will treasure so much more the office space after this if the landlord and tenants, ourselves, the operator, can make it their corporate public-private space,” he said. “I guess if we can make it a corporate public-private space, we will love the office, even so much more.”
Midori Suzuki-Tshushima said Tosei Asset Advisors did a similar relocation from its cramped quarters in Tokyo’s CBD to a farther-out location with more space. The parent group bought a 30-year-old building and refurbished it for Tosei’s own use, with positive results.
“We did the major renovation upgrade works, air conditioning, and we did some cosmetic surgery and replaced some of the interior finishing,” said Suzuki-Tshushima, who oversees client relations at the firm. “And what we did was we created more than enough meeting rooms, where in the previous location there was always a big fight over getting the meeting rooms.”
Because of Japan’s traditionally office-oriented culture, there was debate even before the pandemic about the merits of a hybrid work model, but the emergence of COVID forced the issue, she said. Tosei found that while letting employees work from home didn’t sacrifice productivity, it created management challenges such as deciding whether to bring older people back to the office.
“The situation seems to be under control, but there’s always a fear for the next wave,” Suzuki-Tshushima said. “And I think based on my observations, some of the management are not really convinced that we are ready to go back to the office on a 100 percent basis.”
A Trip Down Under
The Office Strategies Forum continues Thursday, 28 October on MTD TV with a panel on Asian Capital & Australian Offices, featuring SC Capital Partners managing director Andrew Heithersay; JLL’s head of capital markets for Australia, Fergal Harris; Real Capital Analytics’ head of analytics for Pacific, Benjamin Martin-Henry; and David Scalzo, managing director of Melbourne-based developer Perri Projects.
The final session in the forum, on 2 November, is Assets for Asia’s New Economy. The panel will discuss how the rise of the tech industry is reshaping office markets around the region. Scheduled speakers include Tim Graham, head of capital strategies for Asia Pacific at JLL; Terence Seah, director and head of Hong Kong, Singapore and Shenzhen for global design firm Benoy; and Augustine Chin, a director with Swiss private equity fund manager Asia Green Real Estate.
Beatrice Laforga provided reporting for this story.