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As the way in which we work changes, so too do office concepts.
As businesses continue to expand their presence globally, a new generation of employees is entering the workforce with different working styles. Over time, while we continue to shift toward a more network-driven way of working, we also see an increasing need for more flexible and collaborative spaces in workplaces, both for varied reasons.
Furthermore, as the way in which we work have changed, so too has office space layouts and how they look like and function.
However, while many companies, both tenants and landlords, have already adopted the trend toward open-plan and flexible office spaces, shifting from traditional to new concepts may not always be easy.
We take a look at the changing face of offices and how it impacts the real estate market.
Out with the old, in with the new
Traditionally, offices feature doors and walls that separate different teams from each other, usually indicating hierarchy among employees. Traditional offices were sometimes referred to as cubicle farms that had rows of partitioned and semi-partitioned spaces.
However, with more companies now promoting employee collaboration, creating an activity-based working environment has been the growing trend. Companies have started to embrace the idea of breaking down customary cubicle walls in favour of large, open-work areas that foster teamwork.
“Over the past decade, occupiers have become more receptive to alternative ways of working within their workplace. Some initiatives have included open-office arrangements, removing the ‘old-style’ management offices; hence, eliminating the hierarchy perception,” said Duncan White, Director of Office Services at Colliers International.
“The implementation of activity-based working design (is a) popular direction. This initiative helps to promote and facilitate increased interaction, collaboration, flexibility and productivity among employees.”
A case for space
One of the most important business cases for open-plan offices is that it allows companies to utilise their office space. Open-plan office layouts allow more employees to work per square inch, which in general, reduces the amount of total office space needed.
“As occupancy costs continue to increase on a global basis… more traditional offices move to adopt more contemporary and smart-working initiatives,” White said.
This is especially true for companies operating offices in Singapore.
According to a study conducted by JLL earlier this year, Singapore ranked 11th in the world’s most expensive office rental markets. Separately, Cushman & Wakefield noted in a report that despite the higher cost, Singapore remains the top location for multinational companies to base their regional headquarters.
In fact, a study done by the consultancy revealed that the space requirements of multinational tech firms in Singapore have increased by over 50 percent per year on average since they first established a permanent office here. However, the rigid terms of their existing lease agreements prevent them from changing their space requirements at this time.
But with these new office layout concepts, the paradigm that a growing headcount equates to a need for bigger office space is no longer always true. An open-plan office allows a large space with no dividing walls to accommodate a larger number of office workers.
In a LinkedIn blog post about the cost-effectiveness of open-plan offices, it says it is “undeniable” that open-plan layouts reduce floor space requirements, and that while estimates vary, the advantage is “at least 3 to 1 and perhaps as high as 5 to 1”.
“In other words, the same rented area that would accommodate five employees in private offices could accommodate anywhere from 15 to 25 employees in an open plan,” wrote Geoffery James.
Space utilisation
Capital Tower is CapitaLand’s test bed for alternative workspaces. (Photo: CapitaLand)
However, while the newer office buildings in the market are of better quality, with many offering large floor plates that offer tenants more flexibility in terms of office layout and space utilisation, older office towers may not be able to easily adopt the more modern office set-ups because of how they are designed.
To combat this restriction, Christine Li, Research Director at Cushman & Wakefield Singapore, suggested that landlords of such buildings can bundle up their spaces together.
Cushman & Wakefield suggests that landlords should consider converting undesirable or non-performing spaces into open-plan workspaces. The consultancy added that tenants should secure an extra option to rent the space on a flexible basis, as and when they need it.
Recently, CapitaLand pioneered a test bed for alternative workspaces in its partnership with Collective Works that was announced in March.
The property giant will transform the 12th floor of Capital Tower into a premium co-working and flexible office space.
“A real estate developer of tomorrow must be able to anticipate and meet the future expectations of its customers. It is, therefore, incumbent on CapitaLand to constantly assess opportunities that will allow us to stay ahead of the curve and seize first-mover advantages,” said President and Chief Executive Officer Lim Ming Yan.
As office landlords face stiffer competition for tenants amidst the large incoming supply, they too are encouraged to consider utilising their spaces by offering flexible offices, communal workspace facilities for tenants, and co-working spaces, said Cushman & Wakefield.
Future-proof
While these office concepts are on the rise, Colliers notes that they may not necessarily suit all industries. Workplace policies and needs vary considerably between organisations, which means the right types of workspaces will vary too.
“An idea for the future might be to build for the current occupier, as well as the future occupiers of the development. Developers could consider an inside-out architecture approach to attract versatile occupiers, instead of being industry-specific,” White said.
He noted that while developers are conscious of occupiers’ needs, the inside-out architecture approach should be considered more, in order to attract versatile occupiers, rather than concentrating on industry specific direction.
For developers to future-proof their assets, White said future developments should not necessarily be about building space for specific industries, but aimed more towards building for diversified industries.
“The trend would be that developments will not necessarily concentrate on (providing) space for industries, as it might have been previously for the financial sector. Instead, developments are (aimed) at meeting the needs of varied industries and companies – a versatile approach promoting building longevity.”
Other experts added that since working styles are always changing, in the end, the key is to ensure a development is versatile enough to cater to its consumers’ rapidly-changing needs.
Guoco Tower
Peck Seah Street / Choon Guan Street
Type: Grade A office space
Developer: GuocoLand
Tenure: 999-year leasehold
Built-up Area: 890,000 sq ft
Nearby Amenities: Urban Park, luxury business hotel, retail shops
Nearest Transport: Tanjong Pagar MRT
Scheduled Completion: Mid-2016
Guoco Tower forms the office component of the soon-to-be completed Tanjong Pagar Centre, GuocoLand’s first integrated mixed-use project in Singapore.
Located in Tanjong Pagar, Guoco Tower offers 890,000 sq ft of premium Grade A office space, with column-free floor plates measuring from 27,000 sq ft to 30,000 sq ft.
There is a dedicated office entrance, luxurious lobby and environmentally-friendly features. Many security measures are in place, such as controlled floor access, professional security patrols and CCTV monitoring of building entrances and common areas.
Aside from the main drop-off point, there are two other entrances that provide direct access to the MRT station and 150,000 sq ft Urban Park.
Facilities include a dedicated concierge service and glass observation deck. Guoco Tower is also close to bars and restaurants in Chinatown and Tanjong Pagar.
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